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	$112,400
Accounts Receivable	215,800
Finished Goods	45,300
Work in Process	30,200
Materials	49,600
Prepaid Expenses	3,700
Plant and Equipment	565,400
Accumulated DepreciationPlant and Equipment			$243,100
Accounts Payable			186,900
Common Stock, $10 par			300,000
Retained Earnings			292,400
	$1,022,400		$1,022,400

Factory output and sales for 20Y9 are expected to total 28,000 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	$28,000		_
Other factory overhead	8,700		5
Selling expenses:
Sales salaries and commissions	100,500		14
Advertising	84,000		_
Miscellaneous selling expense	7,300		2
Administrative expenses:
Office and officers salaries	66,100		7
Supplies	3,400		1
Miscellaneous administrative expense	1,800		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 $271,300 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 $153,000 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