As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 2011, the following tentative trial balance as of December 31, 2010, is prepared by the Accounting Department of Spring Garden Soap Co.:

Factory output and sales for 2011 are expected to total 225,000 units of product, which are to be sold at $5.20 per unit. The quantities and costs of the inventories at December 31, 2011, are expected to remain unchanged from the balances at the beginning of the year. Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows:

Balances of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. Federal income tax of $90,000 on 2011 taxable income will be paid during 2011. Regular quarterly cash dividends of $1.00 a share are expected to be declared and paid in March, June, September, and December on 19,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $75,000 cash in May.

Instructions1. Prepare a budgeted income statement for 2011.2. Prepare a budgeted balance sheet as of December 31, 2011, with supporting calculations.

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$ 100,000 112,300 76,700 24,300 54,100 3,400 375,000 Cash. Accounts Receivable. Finished Goods.. Work in Process Materials Prepaid Expenses Plant and Equipment Accumulated Depreciation-Plant and Equipment. Accounts Payable. Common Stock, $10 par Retained Earnings.. $140,400 190,000 356,400 5745,800 $745,800