As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y4, the following tentative trial balance as of December 31, 2043, is prepared by the Accounting Department of Regina Soap Co.: Cash $118,700 Accounts Receivable 217,200 Finished Goods 45,600 Work in Process 30,400 Materials 50,000 Prepaid Expenses 3,700 Plant and Equipment 568,600 Accumulated Depreciation-Plant and Equipment $244,500 Accounts Payable 210,500 Common Stock, $10 par 250,000 Retained Earnings 329,200 $1,034,200 $1,034,200 Factory output and sales 20Y4 are expected to total 28,000 units of product, which are to sold at $100 per unit. The quantities and costs of the inventories at December 31, 20Y4, 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 Variable (Total for Year) (Per Unit Sold) Cost of goods manufactured and sold: Direct materials $25 Direct labor 8 Factory overhead: Depreciation of plant and equipment $28,000 Other factory overhead 8,700 4.5 Selling expenses: Sales salaries and commissions 100,500 12.5 Advertising 84,000 Miscellaneous selling expense 7,300 2 Administrative expenses: Office and officers salaries 66,100 6.5 Supplies 3,400 1 Miscellaneous administrative expense 1,800 1.5 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 $237,700 on 2014 taxable income will be paid during 20Y4. Regular quarterly cash dividends of $1 per share are expected to be declared and paid in March, June, September, and December on 25,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $154,000 cash in May. Required: 1. Prepare a budgeted income statement for 20Y4. Regina Soap Co. Budgeted Income Statement For the Year Ending December 31, 2014 Sales Cost of goods sold: Direct materials Direct labor Factory overhead Cost of goods sold Gross profit Operating expenses: Selling expenses: Sales salaries and commissions Advertising Miscellaneous selling expense o Total selling expenses Administrative expenses: Office and officers salaries Supplies Miscellaneous administrative expense Total administrative expenses o Total operating expenses Income before income tax Income tax expense Net income 2. Prepare a budgeted balance sheet as of December 31, 2014. Regina Soap Co. Budgeted Balance Sheet December 31, 2014 Assets Current assets: Cash 621,500 X Accounts receivable 217,200 Inventories: Finished goods 45,600 Work in process 30,400 Materials 50,000 126,000 Prepaid expenses 3,700 Total current assets 968,400 x Property, plant, and equipment: Plant and equipment 722,600 Less accumulated depreciation -272,500 450,100 Total assets 1,418,500 x Liabilities Current liabilities: Accounts payable 210,500 Stockholders' Equity Common stock 250,000 Retained earnings 958,000 x Total stockholders' equity 120,800 x Total liabilities and stockholders' equity 141,850 x