As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 2017, the following tentative trial balance as of December 31, 2016, is prepared by the Accounting Department of Regina Soap Co.: Cash $ 85,000 Accounts Receivable 125,600 Finished Goods 69,300 Work in Process 32,500 Materials 48,900 Prepaid Expenses 2,600 Plant and Equipment 325,000 Accumulated DepreciationPlant and Equipment $156,200 Accounts Payable 62,000 Common Stock, $10 par 180,000 Retained Earnings 290,700 $688,900 $688,900 Factory output and sales for 2017 are expected to total 200,000 units of product, which are to be sold at $5.00 per unit. The quantities and costs of the inventories at December 31, 2017, 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 _ $1.10 Direct labor _ 0.65 Factory overhead: Depreciation of plant and equipment $40,000 _ Other factory overhead 12,000 0.40 Selling expenses: Sales salaries and commissions 46,000 0.45 Advertising 64,000 _ Miscellaneous selling expense 6,000 0.25 Administrative expenses: Office and officers salaries 72,400 0.12 Supplies 5,000 0.10 Miscellaneous administrative expense 4,000 0.05 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 $30,000 on 2017 taxable income will be paid during 2017. Regular quarterly cash dividends of $0.15 per share are expected to be declared and paid in March, June, September, and December on 18,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $75,000 cash in May.

Required: Prepare a budgeted income statement for 2017. Prepare a budgeted balance sheet as of December 31, 2017.