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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.

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2. Prepare a budgeted balance sheet as of December 31, 20Y4.

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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 tax

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