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 | $119,000 | ||
Accounts Receivable | 220,100 | ||
Finished Goods | 46,200 | ||
Work in Process | 30,800 | ||
Materials | 50,600 | ||
Prepaid Expenses | 3,700 | ||
Plant and Equipment | 616,400 | ||
Accumulated DepreciationPlant and Equipment | $265,100 | ||
Accounts Payable | 184,000 | ||
Common Stock, $10 par | 350,000 | ||
Retained Earnings | 287,700 | ||
$1,086,800 | $1,086,800 |
Factory output and sales for 20Y4 are expected to total 29,000 units of product, which are to be sold at $100 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 | _ | $25 | ||
Direct labor | _ | 8 | ||
Factory overhead: | ||||
Depreciation of plant and equipment | $29,000 | _ | ||
Other factory overhead | 9,000 | 4.5 | ||
Selling expenses: | ||||
Sales salaries and commissions | 104,100 | 12.5 | ||
Advertising | 87,000 | _ | ||
Miscellaneous selling expense | 7,500 | 2 | ||
Administrative expenses: | ||||
Office and officers salaries | 68,400 | 6.5 | ||
Supplies | 3,500 | 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 $246,200 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 $166,000 cash in May.
Required:
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 | fill in the blank 3e4e6bf6af97029_9 | ||
Gross profit | $fill in the blank 3e4e6bf6af97029_10 | ||
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 | $fill in the blank 3e4e6bf6af97029_17 | ||
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 | fill in the blank 3e4e6bf6af97029_24 | ||
Total operating expenses | fill in the blank 3e4e6bf6af97029_25 | ||
Income before income tax | $fill in the blank 3e4e6bf6af97029_26 | ||
AdvertisingDirect materialsFactory overheadIncome tax expenseSupplies | - Select - | ||
Gross profitNet incomeNet loss | $- Select - |
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 | $fill in the blank ba515f063faa056_2 | ||
Accounts payableAccounts receivablePlant and equipmentRetained earningsWork in process | fill in the blank ba515f063faa056_4 | ||
Inventories: | |||
Accumulated depreciationCashCommon stockFinished goodsPlant and equipment | $fill in the blank ba515f063faa056_6 | ||
Accounts payableCashPlant and equipmentPrepaid expensesWork in process | fill in the blank ba515f063faa056_8 | ||
Accounts payableCashCommon stockMaterialsPlant and equipment | fill in the blank ba515f063faa056_10 | fill in the blank ba515f063faa056_11 | |
Accounts payablePlant and equipmentPrepaid expensesRetained earningsWork in process | fill in the blank ba515f063faa056_13 | ||
Total current assets | fill in the blank ba515f063faa056_14 | ||
Property, plant, and equipment: | |||
Accounts receivableCashCommon stockMaterialsPlant and equipment | $fill in the blank ba515f063faa056_16 | ||
Less accounts payableLess accumulated depreciationLess prepaid expensesLess retained earningsLess work in process | fill in the blank ba515f063faa056_18 | fill in the blank ba515f063faa056_19 | |
Total assets | $fill in the blank ba515f063faa056_20 | ||
Liabilities | |||
Current liabilities: | |||
Accounts payableCashCommon stockMaterialsPlant and equipment | $fill in the blank ba515f063faa056_22 | ||
Stockholders' Equity | |||
Accounts payableAccumulated depreciationCommon stockPlant and equipmentPrepaid expenses | $fill in the blank ba515f063faa056_24 | ||
Accumulated depreciationCashPlant and equipmentPrepaid expensesRetained earnings | fill in the blank ba515f063faa056_26 | ||
Total stockholders equity | fill in the blank ba515f063faa056_27 | ||
Total liabilities and stockholders equity |
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