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	$99,100
Accounts Receivable	187,300
Finished Goods	39,300
Work in Process	26,200
Materials	43,100
Prepaid Expenses	3,200
Plant and Equipment	485,600
Accumulated DepreciationPlant and Equipment			$208,800
Accounts Payable			146,300
Common Stock, $10 par			300,000
Retained Earnings			228,700
	$883,800		$883,800

Factory output and sales for 2017 are expected to total 24,000 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	$24,000		_
Other factory overhead	7,400		5
Selling expenses:
Sales salaries and commissions	86,200		14
Advertising	72,000		_
Miscellaneous selling expense	6,200		2
Administrative expenses:
Office and officers salaries	56,600		7
Supplies	2,900		1
Miscellaneous administrative expense	1,500		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 $232,600 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 $131,000 cash in May.

Required:

Prepare a budgeted income statement for 2017.

Prepare a budgeted balance sheet as of December 31, 2017.

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------

Part 1: Budgeted Income Statement 1. Prepare a budgeted income statement for 2017. For the Year Ending December 31, 2017 Cost of goods sold Gross profit Operating expenses: Selling expenses: Total selling expenses Total operating expenses