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Budgeted income statement and balance sheet

As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January $1,20$Y$9,$ the following tentative trial balance as of December $31,20$Y$8,$ is prepared by the Accounting Department of Regina Soap Co$.$:

Account Title Debit Balance Credit Balance

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 Depreciation$$Plant and Equipment $$156,200$

Accounts Payable $62,000$

Common Stock, $$10$ par $180,000$

Retained Earnings $290,700$

Total $$688,900$ $$688,900$

Factory output and sales for $20$Y$9$ are expected to total $200,000$ units of product, which are to be sold at $$5\mathrm{.}00$ per unit. The quantities and costs of the inventories at December $31,20$Y$9,$ 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

Line Item Description Fixed

$($Total for Year$)$ Variable

$($Per Unit Sold$)$

Cost of goods manufactured and sold:

Direct materials $\_$ $$1\mathrm{.}10$

Direct labor $\_0\mathrm{.}65$

Factory overhead:

Depreciation of plant and equipment $$40,000\_$

Other factory overhead $12,0000\mathrm{.}40$

Selling expenses:

Sales salaries and commissions $46,0000\mathrm{.}45$

Advertising $64,000\_$

Miscellaneous selling expense $6,0000\mathrm{.}25$

Administrative expenses:

Office and officers salaries $72,4000\mathrm{.}12$

Supplies $5,0000\mathrm{.}10$

Miscellaneous administrative expense $4,0000\mathrm{.}05$

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 $$30,000$ on $20$Y$9$ taxable income will be paid during $20$Y$9.$ Regular quarterly cash dividends of $$0\mathrm{.}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 $20$Y$9.$

Regina Soap Co$.$

Budgeted Income Statement

For the Year Ending December $31,20$Y$9$

Line Item Description Amount Amount Amount

Sales

$Sales

$1,000,000$

Cost of goods sold:

Direct materials

$Direct materials

$220,000$

Direct labor

Direct labor

$130,000$

Factory overhead

Factory overhead

$132,000$

Cost of goods sold Cost of goods sold

$482,000$

Gross profit $Gross profit

$518,000$

Operating expenses:

Selling expenses:

Sales salaries and commissions

$Sales salaries and commissions

$136,000$

Advertising

Advertising

$64,000$

Miscellaneous selling expense

Miscellaneous selling expense

$56,000$

Total selling expenses $Total selling expenses

$256,000$

Administrative expenses:

Office and officers salaries

$Office and officers salaries

$96,400$

Supplies

Supplies

$25,000$

Miscellaneous administrative expense

Miscellaneous administrative expense

$14,000$

Total administrative expenses Total administrative expenses

$135,400$

Total operating expenses Total operating expenses

$391,400$

Income before income tax $Income before income tax

$126,600$

Income tax expense

Income tax expense

$30,000$

Net income

$Net income

$96,600$

What is the balance sheet for this