Question
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,
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, 20Y4, the following tentative trial balance as of December 31, 20Y3, is prepared by the Accounting Department of Regina Soap Co.:
Cash | $99,300 | ||
Accounts Receivable | 179,700 | ||
Finished Goods | 37,700 | ||
Work in Process | 25,200 | ||
Materials | 41,300 | ||
Prepaid Expenses | 3,100 | ||
Plant and Equipment | 475,600 | ||
Accumulated DepreciationPlant and Equipment | $204,500 | ||
Accounts Payable | 119,900 | ||
Common Stock, $10 par | 350,000 | ||
Retained Earnings | 187,500 | ||
$861,900 | $861,900 |
Factory output and sales for 20Y4 are expected to total 23,000 units of product, which are to be sold at $90 per unit. The quantities and costs of the inventories at December 31, 20Y4, 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 | $23,000 | _ | ||
Other factory overhead | 7,100 | 4 | ||
Selling expenses: | ||||
Sales salaries and commissions | 82,600 | 11.5 | ||
Advertising | 69,000 | _ | ||
Miscellaneous selling expense | 6,000 | 2 | ||
Administrative expenses: | ||||
Office and officers salaries | 54,300 | 5.5 | ||
Supplies | 2,800 | 1 | ||
Miscellaneous administrative expense | 1,400 | 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 $164,200 on 20Y4 taxable income will be paid during 20Y4. 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 $128,000 cash in May.
Required:
Question Content Area
1. Prepare a budgeted income statement for 20Y4.
Gross profitIncome before income taxInterest expenseInterest revenueSales | $- Select - | ||
Cost of goods sold: | |||
Direct materialsIncome tax expenseMiscellaneous selling expenseOffice and officers salariesSupplies | $- Select - | ||
Direct laborGross profitIncome tax expenseMiscellaneous administrative expenseSales | - Select - | ||
AdvertisingFactory overheadIncome tax expenseSales salaries and commissionsSales | - Select - | ||
Cost of goods sold | |||
Gross profit | $ | ||
Operating expenses: | |||
Selling expenses: | |||
Income tax expenseNet lossSales salaries and commissionsSalesSupplies | $- Select - | ||
AdvertisingDirect laborDirect materialsFactory overheadNet loss | - Select - | ||
Gross profitIncome tax expenseMiscellaneous selling expenseSalesSupplies | - Select - | ||
Total selling expenses | $ | ||
Administrative expenses: | |||
AdvertisingIncome tax expenseOffice and officers salariesSales salaries and commissionsSales | $- Select - | ||
AdvertisingDirect materialsFactory overheadNet lossSupplies | - Select - | ||
Gross profitIncome tax expenseMiscellaneous administrative expenseMiscellaneous selling expenseSales | - Select - | ||
Total administrative expenses | |||
Total operating expenses | |||
Income before income tax | $ | ||
AdvertisingDirect materialsFactory overheadIncome tax expenseSupplies | - Select - | ||
Gross profitNet incomeNet loss | $- Select - |
Question Content Area
2. Prepare a budgeted balance sheet as of December 31, 20Y4.
Regina Soap Co. Budgeted Balance Sheet December 31, 20Y4 | |||
Assets | |||
Current assets: | |||
Accounts payableCashCommon stockMaterialsPlant and equipment | $ | ||
Accounts payableAccounts receivablePlant and equipmentRetained earningsWork in process | |||
Inventories: | |||
Accumulated depreciationCashCommon stockFinished goodsPlant and equipment | $ | ||
Accounts payableCashPlant and equipmentPrepaid expensesWork in process | |||
Accounts payableCashCommon stockMaterialsPlant and equipment | |||
Accounts payablePlant and equipmentPrepaid expensesRetained earningsWork in process | |||
Total current assets | |||
Property, plant, and equipment: | |||
Accounts receivableCashCommon stockMaterialsPlant and equipment | $ | ||
Less accounts payableLess accumulated depreciationLess prepaid expensesLess retained earningsLess work in process | |||
Total assets | $ | ||
Liabilities | |||
Current liabilities: | |||
Accounts payableCashCommon stockMaterialsPlant and equipment | $ | ||
Stockholders' Equity | |||
Accounts payableAccumulated depreciationCommon stockPlant and equipmentPrepaid expenses | $ | ||
Accumulated depreciationCashPlant and equipmentPrepaid expensesRetained earnings | |||
Total stockholders equity | |||
Total liabilities and stockholders equity | $ |
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