Budgeted Balance Sheet

A budgeted balance sheet helps managers see how planned business activities will affect assets, liabilities, and equity before they happen.

At Delta Corporation, the finance manager, John, reviews a plan to buy equipment worth five hundred thousand dollars.

He prepares a budgeted balance sheet to assess the company’s financial position at the end of the fiscal year if the equipment is financed with a short term loan.

The current position shows cash of three hundred thousand dollars and fixed assets of one million dollars, giving total assets of one point three million dollars.

The company currently has liabilities of one hundred thousand dollars and equity of one point two million dollars.

If the equipment is acquired, fixed assets and liabilities will increase by five hundred thousand dollars.

This increases debt while maintaining adequate cash for operations.

The budgeted balance sheet reflects higher fixed assets and a mix of debt and equity, with total assets equal to total liabilities and equity.

It provides a clear view of the company’s future financial position and supports a structured and well-informed investment decision.