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.:

Account TitleDebit BalanceCredit BalanceCash$116,200 Accounts Receivable223,100 Finished Goods46,900 Work in Process31,200 Materials51,300 Prepaid Expenses3,800 Plant and Equipment518,300 Accumulated DepreciationPlant and Equipment $222,900Accounts Payable 163,000Common Stock, $10 par 350,000Retained Earnings 254,900Total$990,800$990,800

Factory output and sales for 20Y9 are expected to total 27,000 units of product, which are to be sold at $120 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:

Line Item Description Fixed (Total for Year) Variable (Per Unit Sold)Cost of goods manufactured and sold: Direct materials_$30Direct labor_9.5Factory overhead: Depreciation of plant and equipment$27,000_ Other factory overhead8,4005.5Selling expenses: Sales salaries and commissions96,90015Advertising81,000_Miscellaneous selling expense7,0002.5Administrative expenses: Office and officers salaries63,7007.5Supplies3,2001Miscellaneous administrative expense1,7002

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 $294,000 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 35,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $140,000 cash in May.

Required:

Question Content Area

1. Prepare a budgeted income statement for 20Y9.

Line Item DescriptionAmountAmountAmountGross profitIncome before income taxInterest expenseInterest revenueSalesSales $SalesCost of goods sold: Direct materialsIncome tax expenseMiscellaneous selling expenseOffice and officers salariesSuppliesDirect materials $Direct materials Direct laborGross profitIncome tax expenseMiscellaneous administrative expenseSalesDirect labor Direct labor AdvertisingFactory overheadIncome tax expenseSales salaries and commissionsSalesFactory overhead Factory overhead Cost of goods sold Cost of goods soldGross profit $Gross profitOperating expenses: Selling expenses: Income tax expenseNet lossSales salaries and commissionsSalesSuppliesSales salaries and commissions$Sales salaries and commissions AdvertisingDirect laborDirect materialsFactory overheadNet lossAdvertisingAdvertising Gross profitIncome tax expenseMiscellaneous selling expenseSalesSuppliesMiscellaneous selling expenseMiscellaneous selling expense Total selling expenses $Total selling expenses Administrative expenses: AdvertisingIncome tax expenseOffice and officers salariesSales salaries and commissionsSalesOffice and officers salaries$Office and officers salaries AdvertisingDirect materialsFactory overheadNet lossSuppliesSuppliesSupplies Gross profitIncome tax expenseMiscellaneous administrative expenseMiscellaneous selling expenseSalesMiscellaneous administrative expenseMiscellaneous administrative expense Total administrative expenses Total administrative expenses Total operating expenses Total operating expensesIncome before income tax $Income before income taxAdvertisingDirect materialsFactory overheadIncome tax expenseSuppliesIncome tax expense Income tax expenseGross profitNet incomeNet lossNet income $Net income

Question Content Area

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

Line Item DescriptionAmountAmountAmountAssets Current assets:

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Accounts payableCashCommon stockMaterialsPlant and equipmentCash

fill in the blank 2 of 28$

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Accounts payableAccounts receivablePlant and equipmentRetained earningsWork in processAccounts receivable

fill in the blank 4 of 28 Inventories:

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Accumulated depreciationCashCommon stockFinished goodsPlant and equipmentFinished goods

fill in the blank 6 of 28$

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Accounts payableCashPlant and equipmentPrepaid expensesWork in processWork in process

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Accounts payableCashCommon stockMaterialsPlant and equipmentMaterials

fill in the blank 10 of 28 Total fill in the blank 11 of 28

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Accounts payablePlant and equipmentPrepaid expensesRetained earningsWork in processPrepaid expenses

fill in the blank 13 of 28 Total current assets fill in the blank 14 of 28$Property, plant, and equipment:

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Accounts receivableCashCommon stockMaterialsPlant and equipmentPlant and equipment

fill in the blank 16 of 28$

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Accounts payableAccumulated depreciationPrepaid expensesRetained earningsWork in processAccumulated depreciation

fill in the blank 18 of 28 Total property, plant, and equipment fill in the blank 19 of 28Total assets fill in the blank 20 of 28$Liabilities Current liabilities:

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Accounts payableCashCommon stockMaterialsPlant and equipmentAccounts payable

fill in the blank 22 of 28$Stockholders' Equity

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Accounts payableAccumulated depreciationCommon stockPlant and equipmentPrepaid expensesCommon stock

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Accumulated depreciationCashPlant and equipmentPrepaid expensesRetained earningsRetained earnings

fill in the blank 26 of 28 Total stockholders equity fill in the blank 27 of 28Total liabilities and stockholders equity