et PR 6-5A Budgeted income statement and balance sheet OBJ. 4,5 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 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 Depreciation--Plant 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 2017 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, 2017, are expected to remain unchanged from the balances at the beginning of the year. Budgeting Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows: Estimated Costs and Expenses Fixed Variable (Total for Year) (Per Unit Sold) Cost of goods manufactured and sold: $1.10 Direct materials. 0.65 Direct labor. Factory overhead: Depreciation of plant and equipment $40,000 12,000 0.40 Other factory overhead... 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 2017 taxable income will be paid during 2017. Regular quar- terly 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. Instructions 1. Prepare a budgeted income statement for 2017 2. Prepare a budgeted balance sheet as of December 31, 2017, with supporting calculations, Assets Current assets Cash Accounts receivable Inventories Finished goods Work in process Matenals Prepaid expenses Total current assets Property, plant, and equipment: Plant and equipment Less accumulated depreciation Total assets Liabilities Current liabilities Accounts payable Stockholders' Equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 7 38 39 90 91 92 93 94 95 96 97 Supporting calculations for budgeted balance sheet: Cash balance Balance, January 1, 2017 Plus cash from operations Net income from budgeted income statement) Depreciation (add back noncash iter) Less planned nonoperating cash outflows: Dividends to be paid in 2017 Plant and equipment to be acquired in 2017 Balance, December 31, 2017 99 100 101 102 103 104 105 ID Retained earnings balance Balance, January 1, 2017 Pr. 21(6)-5A Type here to search B D H J K E G Budgeted Income Statement For the Year Ending December 31, 2017 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 Supplies Miscellaneous admin expenses Total administrative expenses Total operating expenses Income before income tax 9 Income tax expense 0 Net income 1 2 43 Supporting calculations for budgeted income statement: 45 45 Factory overhead 47 Vanable overhead 48 Depreciation 49 Other 50 Total 51 52 Sales salaries and commissions 53 Fixed portion 54 Variable portion 55 Total Pr. 21061 SA EM > Office and officers salaries: Fuced portion Variable portion Total Supplies expense. Faced portion Vanable portion Total Type here to search O Supporting calculations for budgeted income statement Factory overhead Vanable overhead Depreciation Other Total Office and officers salaries. Fixed portion Vanable portion Total Sales salaries and commissions Fixed portion Variable portion Total Supplies expense: Fixed portion Vanable portion Total Miscellaneous Selling expenses Fixed portion Vanable portion Total Miscellaneous administrative expenses Fixed portion Variable portion Total + 63 2 64 65 66 REGINA SOAP CO. Budgeted Balance Sheet For the Year Ending December 31, 2017 OT Assets C B D E G . Stockholders' Equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Supporting calculations for budgeted balance sheet: Cash balance: Balance, January 1, 2017 Plus cash from operations: Net income (from budgeted income statement) Depreciation (add back noncash item) Less planned nonoperating cash outflows: Dividends to be paid in 2017 Plant and equipment to be acquired in 2017 Balance, December 31, 2017 Retained earnings balance Balance January 1, 2017 Plus expected net income for 2017 Less dividends to be paid in 2017 Balance, December 31, 2017 08 09 10 11 112 113 115