Question
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,
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 | $107,600 | ||
| Accounts Receivable | 206,600 | ||
| Finished Goods | 43,400 | ||
| Work in Process | 28,900 | ||
| Materials | 47,500 | ||
| Prepaid Expenses | 3,500 | ||
| Plant and Equipment | 507,900 | ||
| Accumulated DepreciationPlant and Equipment | $218,400 | ||
| Accounts Payable | 186,000 | ||
| Common Stock, $10 par | 250,000 | ||
| Retained Earnings | 291,000 | ||
| $945,400 | $945,400 |
Factory output and sales for 2017 are expected to total 26,000 units of product, which are to be sold at $110 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 (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 | $26,000 | _ | ||
| Other factory overhead | 8,100 | 5 | ||
| Selling expenses: | ||||
| Sales salaries and commissions | 93,300 | 14 | ||
| Advertising | 78,000 | _ | ||
| Miscellaneous selling expense | 6,800 | 2 | ||
| Administrative expenses: | ||||
| Office and officers salaries | 61,400 | 7 | ||
| Supplies | 3,100 | 1 | ||
| Miscellaneous administrative expense | 1,600 | 1.5 | ||
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 $107,600 Accounts Receivable 206,600 Finished Goods 43,400 Work in Process 28,900 Materials 47,500 Prepaid Expenses 3,500 Plant and Equipment 507,900 Accumulated DepreciationPlant and Equipment $218,400 Accounts Payable 186,000 Common Stock, $10 par 250,000 Retained Earnings 291,000 $945,400 $945,400 Factory output and sales for 2017 are expected to total 26,000 units of product, which are to be sold at $110 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 (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 $26,000 _ Other factory overhead 8,100 5 Selling expenses: Sales salaries and commissions 93,300 14 Advertising 78,000 _ Miscellaneous selling expense 6,800 2 Administrative expenses: Office and officers salaries 61,400 7 Supplies 3,100 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 $251,900 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 25,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $137,000 cash in May.
| Budgeted Income Statement | |||
| For the Year Ending December 31, 2017 | |||
| Sales | $ | ||
| Cost of goods sold: | |||
| Direct materials | $ | ||
| Direct labor | |||
| Factory overhead | |||
| Cost of goods sold | |||
| Gross profit | $ | ||
| Operating expenses: | |||
| Selling expenses: | |||
| Sales salaries and commissions | $ | ||
| Advertising | |||
| Miscellaneous selling expense | |||
| Total selling expenses | $ | ||
| Administrative expenses: | |||
| Office and officers salaries | $ | ||
| Supplies | |||
| Miscellaneous administrative expense | |||
| Total administrative expenses | |||
| Total operating expenses | |||
| Income before income tax | $ | ||
| Income tax expense | |||
| Net income | $ | ||
2. Prepare a budgeted balance sheet as of December 31, 2017.
| Regina Soap Co. Budgeted Balance Sheet December 31, 2017 | |||
|---|---|---|---|
| Assets | |||
| Current assets: | |||
| Cash | |||
| Accounts receivable | |||
| Inventories: | |||
| Finished goods | |||
| Work in process | |||
| Materials | |||
| Prepaid expenses | |||
| Total current assets | |||
| Property, plant, and equipment: | |||
| Plant and equipment | |||
| Less accumulated depreciation | |||
| Total assets | |||
| Liabilities | |||
| Current liabilities: | |||
| Accounts payable | |||
| Stockholders' Equity | |||
| Common stock | |||
| Retained earnings | |||
| Total stockholders equity | |||
| Total liabilities and stockholders equity | |||
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