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	$99,900
Accounts Receivable	197,800
Finished Goods	41,500
Work in Process	27,700
Materials	45,500
Prepaid Expenses	3,400
Plant and Equipment	450,500
Accumulated DepreciationPlant and Equipment			$193,700
Accounts Payable			145,300
Common Stock, $10 par			300,000
Retained Earnings			227,300
	$866,300		$866,300

Factory output and sales for 20Y4 are expected to total 23,000 units of product, which are to be sold at $120 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	_		$30
Direct labor	_		9.5
Factory overhead:
Depreciation of plant and equipment	$23,000		_
Other factory overhead	7,100		5.5
Selling expenses:
Sales salaries and commissions	82,600		15
Advertising	69,000		_
Miscellaneous selling expense	6,000		2.5
Administrative expenses:
Office and officers salaries	54,300		7.5
Supplies	2,800		1
Miscellaneous administrative expense	1,400		2

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 $250,400 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 30,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $122,000 cash in May.

Required:

Question Content Area

1. Prepare a budgeted income statement for 20Y4.

Regina Soap Co. Budgeted Income Statement For the Year Ending December 31, 20Y4

Gross profit/Income before income tax/Interest expense/Interest revenue/Sales			$_______
Cost of goods sold:
Direct materials/Income tax expense/Miscellaneous selling expense/Office and officers salaries/Supplies		$_________
Direct labor/Gross profit/Income tax expense/Miscellaneous administrative expense/Sales		___________
Advertising/Factory overhead/Income tax expense/Sales salaries and commissions/ales		___________
Cost of goods sold			fill in the blank
Gross profit			$fill in the blank
Operating expenses:
Selling expenses:
Income tax expense/Net loss/Sales salaries and commissions/Sales/Supplies	$______
Advertising/Direct labor/Direct materials/Factory overhead/Net loss	________
Gross profit/Income tax expense/Miscellaneous selling expense/Sales/Supplies	________
Total selling expenses		$fill in the blank
Administrative expenses:
Advertising/Income tax expense/Office and officers salaries/Sales salaries and commissions/Sales	$______
Advertising/Direct materials/Factory overhead/Net loss/Supplies	________
Gross profit/Income tax expense/Miscellaneous administrative expense/Miscellaneous selling expense/Sales	________
Total administrative expenses		fill in the blank
Total operating expenses			fill in the blank
Income before income tax			$fill in the blank
Advertising/Direct materials/Factory overhead/Income tax expense/Supplies			__________
Gross profit/Net income/Net loss			$__________

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: Choose one:
Accounts payable/Cash/Common stock/Materials/Plant and equipment		$fill in the blank
Accounts payable/Accounts receivable/Plant and equipment/Retained earnings/Work in process		fill in the blank
Inventories:
Accumulated depreciation/Cash/Common stock/Finished goods/Plant and equipment	$fill in the blank
Accounts payable/Cash/Plant and equipment/Prepaid expenses/Work in process	fill in the blank
Accounts payable/Cash/Common stock/Materials/Plant and equipment	fill in the blank	fill in the blank
Accounts payable/Plant and equipmen/tPrepaid expenses/Retained earnings/Work in process		fill in the blank
Total current assets			fill in the blank
Property, plant, and equipment:
Accounts receivable/Cash/Common stock/Materials/Plant and equipment		$fill in the blank
Less accounts payable/Less accumulated depreciation/Less prepaid expenses/Less retained earnings/Less work in process		fill in the blank	fill in the blank
Total assets			$fill in the blank
Liabilities
Current liabilities:
Accounts payable/Cash/Common stock/Materials/Plant and equipment			$fill in the blank
Stockholders' Equity
Accounts payable/Accumulated depreciation/Common stock/Plant and equipment/Prepaid expenses		$fill in the blank
Accumulated depreciation/Cash/Plant and equipment/Prepaid expenses/Retained earnings		fill in the blank
Total stockholders equity			fill in the blank
Total liabilities and stockholders equity			$fill in the blank