Browning Manufacturing Company
The management of Browning Manufacturing Company annually prepared a budget of expected financial operations for the ensuing calendar year. The completed budget provided information on all aspects of the coming year's operation. It included a projected balance sheet as of the end of the year and a projected income statement.
The final preparation of statements was accomplished only after careful integration of detailed computations submitted by each department. This was done to ensure that the operation of all departments were in balance with one another. For example, the finance department needed to ba e its schedules of loan transactions and of collections and disbursements on numbers that were dependent on manufacturing, purchasing, and selling expectations. The level of production would be geared to the forecasts of the sales department, and purchasing would be geared to the proposed manufacturing schedule.
In short, it was necessary to integrate the estimates of each department and to revise them in terms of the overall effect on operations to arrive at a coordinated and profitable plan of operations for the coming year. The budget statements ultimately derived from the adjusted estimated transactions would then serve the company as a reliable guide and measure of the coming year's operations.
At the time the 2006 budget was being prepared, in November of 2005, projected 2005 financial statements were compiled for use as a comparison with the budgeted figures. These 2005 statements were based on ten months' actual and two months' projected transactions. They appear as Exhibits 1, 2, and 3.

EXHIBIT 1 Browning Manufacturing Company, Projected Balance Sheet, December 31, 2005 Assets | | | | | Current assets: | | | | | Cash and marketable securities | | | | $118,440 | Accounts receivable (net of