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$113,400

Accounts Receivable214,300

Finished Goods45,000

Work in Process30,000

Materials49,300

Prepaid Expenses3,600

Plant and Equipment501,200

Accumulated DepreciationPlant and Equipment $215,500

Accounts Payable 172,100

Common Stock, $10 par 300,000

Retained Earnings 269,200

$956,800 $956,800

Factory output and sales for 20Y9 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, 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_ $28

Direct labor_ 8.5

Factory overhead:

Depreciation of plant and equipment$26,000 _

Other factory overhead8,100 5

Selling expenses:

Sales salaries and commissions93,300 14

Advertising78,000 _

Miscellaneous selling expense6,800 2

Administrative expenses:

Office and officers salaries61,400 7

Supplies3,100 1

Miscellaneous administrative expense1,600 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 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 $135,000 cash in May.

Required:

1. Prepare a budgeted income statement for 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$

$

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

Regina Soap Co. Budgeted Balance Sheet December 31, 20Y9

Assets

Current assets:

$

Inventories:

$

Total current assets $

Property, plant, and equipment:

$

Total property, plant, and equipment

Total assets $

Liabilities

Current liabilities:

$

Stockholders' Equity

$

Total stockholders equity

Total liabilities and stockholders equity $