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	$109,600
Accounts Receivable	190,700
Finished Goods	40,000
Work in Process	26,700
Materials	43,900
Prepaid Expenses	3,200
Plant and Equipment	495,400
Accumulated DepreciationPlant and Equipment			$213,000
Accounts Payable			135,100
Common Stock, $10 par			350,000
Retained Earnings			211,400
	$909,500		$909,500

Factory output and sales for 20Y9 are expected to total 25,000 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	$25,000		_
Other factory overhead	7,800		5
Selling expenses:
Sales salaries and commissions	89,800		14
Advertising	75,000		_
Miscellaneous selling expense	6,500		2
Administrative expenses:
Office and officers salaries	59,000		7
Supplies	3,000		1
Miscellaneous administrative expense	1,600		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 $242,200 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 35,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $134,000 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
Cost of goods sold:
Cost of goods sold
Gross profit
Operating expenses:
Selling expenses:
Total selling expenses
Administrative expenses:
Total administrative expenses
Total operating expenses
Income before income tax

2. Prepare a budgeted balance sheet as of December 31, 20Y9.

Regina Soap Co. Budgeted Balance Sheet December 31, 20Y9
Assets
Current assets:
Inventories:
Total current assets
Property, plant, and equipment:
Total property, plant, and equipment
Total assets
Liabilities
Current liabilities:
Stockholders' Equity
Total stockholders equity
Total liabilities and stockholders equity