As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Regina Soap Co.: Cash Accounts Receivable $118,100 232,700 Finished Goods Work in Process Materials 48,900 32,600 53,500 Prepaid Expenses 4,000 Plant and Equipment 581,100 Accumulated Depreciation-Plant and Equipment $249,900 Accounts Payable 203,200 Common Stock, $10 par Retained Earnings 300,000 317,800 $1,070,900 $1,070,900 Factory output and sales for 20Y9 are expected to total 29,000 units of product, which are to be sold at $120 per unit. The quantities and costs of the inventories at December 31, 20Y9, 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: Estimated Costs and Expenses Fixed (Total for Year) Variable (Per Unit Sold) Cost of goods manufactured and sold: Direct materials Direct labor $30 9.5 Factory overhead: Depreciation of plant and equipment $29,000 Other factory overhead 9,000 5.5 Selling expenses: Sales salaries and commissions 104,100 15 Advertising 87,000 Miscellaneous selling expense 7,500 2.5 Administrative expenses: Office and officers salaries Supplies Miscellaneous administrative expense 68,400 7.5 3,500 1 1,800 2 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 $315,800 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of $1 per share are expected to be declared and paid in March, June, September, and December on 30,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $157,000 cash in May. Line Item Description Sales Cost of goods sold: Direct materials Direct labor Factory overhead Cost of goods sold Gross profit Regina Soap Co. Budgeted Income Statement For the Year Ending December 31, 20Y9 Amount Amount Amount 3,480,000 870,000 275,500 197,500 1,343,000 2,137,000 Operating expenses: Selling expenses: Sales salaries and commissions 539,100 Advertising 87,000 Miscellaneous selling expense 80,000 Total selling expenses 706,100 Administrative expenses: Office and officers salaries Supplies Miscellaneous administrative expense Total administrative expenses Total operating expenses Income before income tax Income tax expense Net income 68,400 X 32,500 59,800 160,700 X 866,800 X 1,270,200 X 315,800 954,400 X Current assets: Cash Accounts receivable Inventories: Finished goods Work in process Materials Assets Prepaid expenses Total current assets Property, plant, and equipment: Plant and equipment Accumulated depreciation Total property, plant, and equipment Total assets Current liabilities: Accounts payable Liabilities Stockholders' Equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Regina Soap Co. Budgeted Balance Sheet December 31, 20Y9 135,800 X