Budgeted Income Statement and Balance Sheet

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	$100,700
Accounts Receivable	194,400
Finished Goods	40,800
Work in Process	27,200
Materials	44,700
Prepaid Expenses	3,300
Plant and Equipment	473,300
Accumulated DepreciationPlant and Equipment			$203,500
Accounts Payable			148,600
Common Stock, $10 par			300,000
Retained Earnings			232,300
	$884,400		$884,400

Factory output and sales for 20Y9 are expected to total 24,000 units of product, which are to be sold at $90 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	_		$23
Direct labor	_		7
Factory overhead:
Depreciation of plant and equipment	$24,000		_
Other factory overhead	7,400		4
Selling expenses:
Sales salaries and commissions	86,200		11.5
Advertising	72,000		_
Miscellaneous selling expense	6,200		2
Administrative expenses:
Office and officers salaries	56,600		5.5
Supplies	2,900		1
Miscellaneous administrative expense	1,500		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 $171,400 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 $128,000 cash in May.

a.Prepare a budgeted income statement for 20Y9.

b. Prepare a budgeted balance sheet as of December 31, 20Y9.

Regina Soap Co. Budgeted Income Statement For the Year Ending December 31, 20Y9 Cost of goods sold: Cost of goods sold Gross profit Operating expenses: Selling expenses: Total selling expenses Administrative expenses: Total administrative expenses Total operating expenses Income before income tax