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, 2017, the following tentative trial balance as of December 31, 2016, is prepared by the Accounting Department of Webster Publishing Co.: Cash Accounts Receivable Finished Goods Work in Process Materials Prepaid Expenses Plant and Equipment Accumulated Depreciation-Plant and Equipment Accounts Payable Common Stock, $10 par Retained Earnings $117,800 226,200 47,500 31,700 52,000 3,800 566,600 $243,600 195,800 300,000 306,200 $1,045,600 $1,045,600 Factory output and sales for 2017 are expected to total 28,000 units of product, which are to be sold at $90 per unit. The quantities and costs of the inventories at December 31, 2017, 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 Variable (Total for Year) (Per Unit Sold) Cost of goods manufactured and sold: Direct materials Direct labor Factory overhead: 523 Depreciation of plant and equipment Other factory overhead 528,000 8,700 Selling expenses: Sales salaries and commissions Advertising Miscellaneous selling expense 100,500 84,000 7,300 11.5 Administrative expenses: Office and officers salaries 66,100 3,400 1,800 5.5 Supplies Miscellaneous administrative expense 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 $199,900 on 2017 taxable income will be paid during 2017. 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 $153,000 cash in May 1.5 Required Prepare a budgeted income statement for 2017 Prepare a budgeted balance sheet as of December 31, 2017 1. Prepare a budgeted income statement for 2017. Webster Publishing Co. Budgeted Income Statement For the Year Ending December 31, 2017 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, 2017, Webster Publishing Co Budgeted Balance Sheet December 31, 2017 Assets Current assets: Inventories: Total current assets Property, plant, and equipment: Total assets Liabilities Current liabilities: Stockholders' Equity Total stockholders' equity Total liabilities and stockholders equity