Question
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 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, 20Y3, is prepared by the Accounting Department of Regina Soap Co.:
Cash | $108,800 | ||
Accounts Receivable | 206,700 | ||
Finished Goods | 43,400 | ||
Work in Process | 28,900 | ||
Materials | 47,500 | ||
Prepaid Expenses | 3,500 | ||
Plant and Equipment | 528,800 | ||
Accumulated DepreciationPlant and Equipment | $227,400 | ||
Accounts Payable | 191,200 | ||
Common Stock, $10 par | 250,000 | ||
Retained Earnings | 299,000 | ||
$967,600 | $967,600 |
Factory output and sales for 20Y4 are expected to total 26,000 units of product, which are to be sold at $110 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 (Total for Year) | Variable (Per Unit Sold) | |||
Cost of goods manufactured and sold: | ||||
Direct materials | _ | $28 | ||
Direct labor | _ | 8.5 | ||
Factory overhead: | ||||
Depreciation of plant and equipment | $26,000 | _ | ||
Other factory overhead | 8,100 | 5 | ||
Selling expenses: | ||||
Sales salaries and commissions | 93,300 | 14 | ||
Advertising | 78,000 | _ | ||
Miscellaneous selling expense | 6,800 | 2 | ||
Administrative expenses: | ||||
Office and officers salaries | 61,400 | 7 | ||
Supplies | 3,100 | 1 | ||
Miscellaneous administrative expense | 1,600 | 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 $251,900 on 20Y4 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 $143,000 cash in May.
Required:
1. Prepare a budgeted income statement for 20Y4.
2. Prepare a budgeted balance sheet as of December 31, 20Y4.
Regina Soap Co. Budgeted Income Statement For the Year Ending December 31, 20Y4 Cost of goods sold: Cost of goods sold Gross proft Operating expenses Selling expenses: Total selling expenses Administrative expenses: Total administrative expenses Total operating expenses Income before income taxStep by Step Solution
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