Budgeted income statement and balance sheet

As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January $1,20$Y$9,$ the following tentative trial balance as of December $31,20$Y$8,$ is prepared by the Accounting Department of Regina Soap Co$.$:

Account Title Debit Balance Credit Balance

Cash $$113,600$

Accounts Receivable $206,800$

Finished Goods $43,400$

Work in Process $29,000$

Materials $47,600$

Prepaid Expenses $3,500$

Plant and Equipment $564,600$

Accumulated Depreciation$$Plant and Equipment $$242,800$

Accounts Payable $201,100$

Common Stock, $$10$ par $250,000$

Retained Earnings $314,600$

Total $$1,008,500$ $$1,008,500$

Factory output and sales for $20$Y$9$ are expected to total $27,000$ units of product, which are to be sold at $$100$ per unit. The quantities and costs of the inventories at December $31,20$Y$9,$ 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

Line Item Description 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 $$27,000\_$

Other factory overhead $8,4004\mathrm{.}5$

Selling expenses:

Sales salaries and commissions $96,90012\mathrm{.}5$

Advertising $81,000\_$

Miscellaneous selling expense $7,0002$

Administrative expenses:

Office and officers salaries $63,7006\mathrm{.}5$

Supplies $3,2001$

Miscellaneous administrative expense $1,7001\mathrm{.}5$

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 $$229,200$ on $20$Y$9$ taxable income will be paid during $20$Y$9.$ Regular quarterly cash dividends of $$1$ per share are expected to be declared and paid in March, June, September, and December on $25,000$ shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $$152,000$ cash in May.

Required:

Question Content Area

$1.$ Prepare a budgeted income statement for $20$Y$9.$

Regina Soap Co$.$

Budgeted Income Statement

For the Year Ending December $31,20$Y$9$

Line Item Description Amount Amount Amount

Sales

$Sales

$2,700,000$

Cost of goods sold:

Direct materials

$Direct materials

$675,000$

Direct labor

Direct labor

$216,000$

Factory overhead

Factory overhead

$156,900$

Cost of goods sold Cost of goods sold

$1,047,900$

Gross profit $Gross profit

$1,652,100$

Operating expenses:

Selling expenses:

Sales salaries and commissions

$Sales salaries and commissions

$434,400$

Advertising

Advertising

$81,000$

Miscellaneous selling expense

Miscellaneous selling expense

$61,000$

Total selling expenses $Total selling expenses

$576,400$

Administrative expenses:

Office and officers salaries

$Office and officers salaries

$239,200$

Supplies

Supplies

$30,200$

Miscellaneous administrative expense

Miscellaneous administrative expense

Total administrative expenses Total administrative expenses

Total operating expenses Total operating expenses

Income before income tax $Income before income tax

Income tax expense

Income tax expense

Net income

$Net income

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Use information from the expected sales, cost of goods manufactured and sold, and selling and administrative expenses.

Question Content Area

$2.$ Prepare a budgeted balance sheet as of December $31,20$Y$9.$

Regina Soap Co$.$

Budgeted Balance Sheet

December $31,20$Y$9$

Line Item Description Amount Amount Amount

Assets

Current assets:

fill in the blank $1$ of $28$

Cash

fill in the blank $2$ of $28$$

fill in the blank $3$ of $28$

Accounts receivable

fill in the blank $4$ of $28$

Inventories:

fill in the blank $5$ of $28$

Finished goods

fill in the blank $6$ of $28$$

fill in the blank $7$ of $28$

Work in process

fill in the blank $8$ of $28$

fill in the blank $9$ of $28$

Materials

fill in the blank $10$ of $28$

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

fill in the blank $12$ of $28$

Prepaid expenses

fill in the blank $13$ of $28$

Total current assets fill in the blank $14$ of $28$$

Property, plant, and equipment:

fill in the blank $15$ of $28$

Plant and equipment

fill in the blank $16$ of $28$$

fill in the blank $17$ of $28$

Accumulated depreciation

fill in the blank $18$ of $28$

Total property, plant, and equipment fill in the blank $19$ of $28$

Total assets fill in the blank $20$ of $28$$

Liabilities

Current liabilities:

fill in the blank $21$ of $28$

Accounts payable

fill in the blank $22$ of $28$$

Stockholders' Equity

fill in the blank $23$ of $28$

Common stock

fill in the blank $24$ of $28$$

fill in the blank $25$ of $28$

Retained earnings

fill in the blank $26$ of $28$

Total stockholders$$ equity fill in the blank $27$ of $28$

Total liabilities and stockholders$$ equity fill in the blank $28$ of $28$$

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