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, 2015, the following tentative trial balance as of December 31, 2014, is prepared by the Accounting Department of Webster Publishing Co.:

Cash	$119,100
Accounts Receivable	222,700
Finished Goods	46,800
Work in Process	31,200
Materials	51,200
Prepaid Expenses	3,800
Plant and Equipment	569,300
Accumulated DepreciationPlant and Equipment			$244,800
Accounts Payable			175,200
Common Stock, $10 par			350,000
Retained Earnings			274,100
	$1,044,100		$1,044,100

Factory output and sales for 2015 are expected to total 28,000 units of product, which are to be sold at $120 per unit. The quantities and costs of the inventories at December 31, 2015, 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	_		$30.00
Direct labor	_		9.50
Factory overhead:
Depreciation of plant and equipment	$28,000		_
Other factory overhead	8,700		5.50
Selling expenses:
Sales salaries and commissions	100,500		15.00
Advertising	84,000		_
Miscellaneous selling expense	7,300		2.50
Administrative expenses:
Office and officers salaries	66,100		7.50
Supplies	3,400		1.00
Miscellaneous administrative expense	1,800		2.00

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 $304,900 on 2015 taxable income will be paid during 2015. Regular quarterly cash dividends of $1.50 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 $154,000 cash in May.

Required:

1. Prepare a budgeted income statement for 2015. Webster Publishing Co Budgeted Income Statement For the Year Ending December 31,2015 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 |