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	$113,600
Accounts Receivable	219,200
Finished Goods	46,000
Work in Process	30,700
Materials	50,400
Prepaid Expenses	3,700
Plant and Equipment	577,100
Accumulated DepreciationPlant and Equipment			$248,200
Accounts Payable			211,600
Common Stock, $10 par			250,000
Retained Earnings			330,900
	$1,040,700		$1,040,700

Factory output and sales for 2017 are expected to total 28,000 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	$28,000		_
Other factory overhead	8,700		5
Selling expenses:
Sales salaries and commissions	100,500		14
Advertising	84,000		_
Miscellaneous selling expense	7,300		2
Administrative expenses:
Office and officers salaries	66,100		7
Supplies	3,400		1
Miscellaneous administrative expense	1,800		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 $271,300 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 $156,000 cash in May.

Required:

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	$113,600
Accounts Receivable	219,200
Finished Goods	46,000
Work in Process	30,700
Materials	50,400
Prepaid Expenses	3,700
Plant and Equipment	577,100
Accumulated DepreciationPlant and Equipment			$248,200
Accounts Payable			211,600
Common Stock, $10 par			250,000
Retained Earnings			330,900
	$1,040,700		$1,040,700

Factory output and sales for 2017 are expected to total 28,000 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	$28,000		_
Other factory overhead	8,700		5
Selling expenses:
Sales salaries and commissions	100,500		14
Advertising	84,000		_
Miscellaneous selling expense	7,300		2
Administrative expenses:
Office and officers salaries	66,100		7
Supplies	3,400		1
Miscellaneous administrative expense	1,800		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 $271,300 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 $156,000 cash in May.

Required:

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