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 $109,900

Accounts Receivable 190,100

Finished Goods 39,900

Work in Process 26,600

Materials 43,700

Prepaid Expenses 3,200

Plant and Equipment 563,800

Accumulated DepreciationPlant and Equipment $242,400

Accounts Payable 189,100

Common Stock, $10 par 250,000

Retained Earnings 295,700

$977,200 $977,200

Factory output and sales for 20Y9 are expected to total 26,000 units of product, which are to be sold at $120 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 _ $30

Direct labor _ 9.5

Factory overhead:

Depreciation of plant and equipment $26,000 _

Other factory overhead 8,100 5.5

Selling expenses:

Sales salaries and commissions 93,300 15

Advertising 78,000 _

Miscellaneous selling expense 6,800 2.5

Administrative expenses:

Office and officers salaries 61,400 7.5

Supplies 3,100 1

Miscellaneous administrative expense 1,600 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 $283,100 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 25,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $152,000 cash in May.

Required:

1. Prepare a budgeted income statement for 20Y9.

DUGOGGUNG For the Year Ending December 31, 2019 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 Regina Soap Co. Budgeted Balance Sheet December 31, 2019 Assets Current assets: Inventories: Total current assets Property, plant, and equipment: Total property, plant, and equipment Total assets Liabilities 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