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, 20Y4, the following tentative trial balance as of December 31, 20Y3, is prepared by the Accounting Department of Regina Soap Co.:

Cash	$ 85,000
Accounts Receivable	125,600
Finished Goods	69,300
Work in Process	32,500
Materials	48,900
Prepaid Expenses	2,600
Plant and Equipment	325,000
Accumulated DepreciationPlant and Equipment			$156,200
Accounts Payable			62,000
Common Stock, $10 par			180,000
Retained Earnings			290,700
	$688,900		$688,900

Factory output and sales for 20Y4 are expected to total 200,000 units of product, which are to be sold at $5.00 per unit. The quantities and costs of the inventories at December 31, 20Y4, 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	_		$1.10
Direct labor	_		0.65
Factory overhead:
Depreciation of plant and equipment	$40,000		_
Other factory overhead	12,000		0.40
Selling expenses:
Sales salaries and commissions	46,000		0.45
Advertising	64,000		_
Miscellaneous selling expense	6,000		0.25
Administrative expenses:
Office and officers salaries	72,400		0.12
Supplies	5,000		0.10
Miscellaneous administrative expense	4,000		0.05

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 $30,000 on 20Y4 taxable income will be paid during 20Y4. Regular quarterly cash dividends of $0.15 per share are expected to be declared and paid in March, June, September, and December on 18,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $75,000 cash in May.

Required:

Question Content Area

1. Prepare a budgeted income statement for 20Y4.

Gross profitIncome before income taxInterest expenseInterest revenueSales			$- Select -
Cost of goods sold:
Direct materialsIncome tax expenseMiscellaneous selling expenseOffice and officers salariesSupplies		$- Select -
Direct laborGross profitIncome tax expenseMiscellaneous administrative expenseSales		- Select -
AdvertisingFactory overheadIncome tax expenseSales salaries and commissionsSales		- Select -
Cost of goods sold			fill in the blank d02511fe3021fbe_9
Gross profit			$fill in the blank d02511fe3021fbe_10
Operating expenses:
Selling expenses:
Income tax expenseNet lossSales salaries and commissionsSalesSupplies	$- Select -
AdvertisingDirect laborDirect materialsFactory overheadNet loss	- Select -
Gross profitIncome tax expenseMiscellaneous selling expenseSalesSupplies	- Select -
Total selling expenses		$fill in the blank d02511fe3021fbe_17
Administrative expenses:
AdvertisingIncome tax expenseOffice and officers salariesSales salaries and commissionsSales	$- Select -
AdvertisingDirect materialsFactory overheadNet lossSupplies	- Select -
Gross profitIncome tax expenseMiscellaneous administrative expenseMiscellaneous selling expenseSales	- Select -
Total administrative expenses		fill in the blank d02511fe3021fbe_24
Total operating expenses			fill in the blank d02511fe3021fbe_25
Income before income tax			$fill in the blank d02511fe3021fbe_26
AdvertisingDirect materialsFactory overheadIncome tax expenseSupplies			- Select -
Gross profitNet incomeNet loss			$- Select -

Question Content Area

2. Prepare a budgeted balance sheet as of December 31, 20Y4.

Regina Soap Co. Budgeted Balance Sheet December 31, 20Y4
Assets
Current assets:
Accounts payableCashCommon stockMaterialsPlant and equipment		$fill in the blank 5a090f03a02302f_2
Accounts payableAccounts receivablePlant and equipmentRetained earningsWork in process		fill in the blank 5a090f03a02302f_4
Inventories:
Accumulated depreciationCashCommon stockFinished goodsPlant and equipment	$fill in the blank 5a090f03a02302f_6
Accounts payableCashPlant and equipmentPrepaid expensesWork in process	fill in the blank 5a090f03a02302f_8
Accounts payableCashCommon stockMaterialsPlant and equipment	fill in the blank 5a090f03a02302f_10	fill in the blank 5a090f03a02302f_11
Accounts payablePlant and equipmentPrepaid expensesRetained earningsWork in process		fill in the blank 5a090f03a02302f_13
Total current assets			fill in the blank 5a090f03a02302f_14
Property, plant, and equipment:
Accounts receivableCashCommon stockMaterialsPlant and equipment		$fill in the blank 5a090f03a02302f_16
Less accounts payableLess accumulated depreciationLess prepaid expensesLess retained earningsLess work in process		fill in the blank 5a090f03a02302f_18	fill in the blank 5a090f03a02302f_19
Total assets			$fill in the blank 5a090f03a02302f_20
Liabilities
Current liabilities:
Accounts payableCashCommon stockMaterialsPlant and equipment			$fill in the blank 5a090f03a02302f_22
Stockholders' Equity
Accounts payableAccumulated depreciationCommon stockPlant and equipmentPrepaid expenses		$fill in the blank 5a090f03a02302f_24
Accumulated depreciationCashPlant and equipmentPrepaid expensesRetained earnings		fill in the blank 5a090f03a02302f_26
Total stockholders equity			fill in the blank 5a090f03a02302f_27
Total liabilities and stockholders equity			$fill in the blank 5a090f03a02302f_28

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