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	$112,800
Accounts Receivable	220,000
Finished Goods	46,200
Work in Process	30,800
Materials	50,600
Prepaid Expenses	3,700
Plant and Equipment	536,900
Accumulated DepreciationPlant and Equipment			$230,900
Accounts Payable			183,300
Common Stock, $10 par			300,000
Retained Earnings			286,800
	$1,001,000		$1,001,000

Factory output and sales for 20Y4 are expected to total 27,000 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	$27,000		_
Other factory overhead	8,400		5.5
Selling expenses:
Sales salaries and commissions	96,900		15
Advertising	81,000		_
Miscellaneous selling expense	7,000		2.5
Administrative expenses:
Office and officers salaries	63,700		7.5
Supplies	3,200		1
Miscellaneous administrative expense	1,700		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 $294,000 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 $145,000 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 profitIncome before income taxInterest expenseInterest revenueSalesSales			$Sales
Cost of goods sold:
Direct materialsIncome tax expenseMiscellaneous selling expenseOffice and officers salariesSuppliesDirect materials		$Direct materials
Direct laborGross profitIncome tax expenseMiscellaneous administrative expenseSalesDirect labor		Direct labor
AdvertisingFactory overheadIncome tax expenseSales salaries and commissionsSalesFactory overhead		Factory overhead
Cost of goods sold			fill in the blank 838f2b001ff5f96_9
Gross profit			$fill in the blank 838f2b001ff5f96_10
Operating expenses:
Selling expenses:
Income tax expenseNet lossSales salaries and commissionsSalesSuppliesSales salaries and commissions	$Sales salaries and commissions
AdvertisingDirect laborDirect materialsFactory overheadNet lossAdvertising	Advertising
Gross profitIncome tax expenseMiscellaneous selling expenseSalesSuppliesMiscellaneous selling expense	Miscellaneous selling expense
Total selling expenses		$fill in the blank 838f2b001ff5f96_17
Administrative expenses:
AdvertisingIncome tax expenseOffice and officers salariesSales salaries and commissionsSalesOffice and officers salaries	$Office and officers salaries
AdvertisingDirect materialsFactory overheadNet lossSuppliesSupplies	Supplies
Gross profitIncome tax expenseMiscellaneous administrative expenseMiscellaneous selling expenseSalesMiscellaneous administrative expense	Miscellaneous administrative expense
Total administrative expenses		fill in the blank 838f2b001ff5f96_24
Total operating expenses			fill in the blank 838f2b001ff5f96_25
Income before income tax			$fill in the blank 838f2b001ff5f96_26
AdvertisingDirect materialsFactory overheadIncome tax expenseSuppliesIncome tax expense			Income tax expense
Gross profitNet incomeNet lossNet income			$Net income

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 equipmentCash		$fill in the blank 611019000fb4fd9_2
Accounts payableAccounts receivablePlant and equipmentRetained earningsWork in processAccounts receivable		fill in the blank 611019000fb4fd9_4
Inventories:
Accumulated depreciationCashCommon stockFinished goodsPlant and equipment	$fill in the blank 611019000fb4fd9_6
Accounts payableCashPlant and equipmentPrepaid expensesWork in process	fill in the blank 611019000fb4fd9_8
Accounts payableCashCommon stockMaterialsPlant and equipment	fill in the blank 611019000fb4fd9_10	fill in the blank 611019000fb4fd9_11
Accounts payablePlant and equipmentPrepaid expensesRetained earningsWork in process		fill in the blank 611019000fb4fd9_13
Total current assets			fill in the blank 611019000fb4fd9_14
Property, plant, and equipment:
Accounts receivableCashCommon stockMaterialsPlant and equipment		$fill in the blank 611019000fb4fd9_16
Less accounts payableLess accumulated depreciationLess prepaid expensesLess retained earningsLess work in process		fill in the blank 611019000fb4fd9_18	fill in the blank 611019000fb4fd9_19
Total assets			$fill in the blank 611019000fb4fd9_20
Liabilities
Current liabilities:
Accounts payableCashCommon stockMaterialsPlant and equipment			$fill in the blank 611019000fb4fd9_22
Stockholders' Equity
Accounts payableAccumulated depreciationCommon stockPlant and equipmentPrepaid expenses		$fill in the blank 611019000fb4fd9_24
Accumulated depreciationCashPlant and equipmentPrepaid expensesRetained earnings		fill in the blank 611019000fb4fd9_26
Total stockholders equity			fill in the blank 611019000fb4fd9_27
Total liabilities and stockholders equity			$fill in the blank 611019000fb4fd9_28

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