Budgeted Income Statement and Balance Sheet As a preliminary to requesting budge

ID: 2455558 • Letter: B

Question

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.:

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:

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:

Budgeted Income Statement and Balance Sheet

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 Depreciation—Plant and Equipment

$248,200

Accounts Payable

211,600

Common Stock, $10 par

250,000

Retained Earnings

330,900

$1,040,700

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

Selling expenses:

Sales salaries and commissions

100,500

Advertising

84,000

Miscellaneous selling expense

7,300

Administrative expenses:

Office and officers salaries

66,100

Supplies

3,400

Miscellaneous administrative expense

1,800

1.5

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

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 Depreciation—Plant and Equipment $248,200 Accounts Payable 211,600 Common Stock, $10 par 250,000 Retained Earnings 330,900 $1,040,700 $1,040,700

Explanation / Answer

Webster Publishing Co. Budgeted Income Statement For the Year Ending December 31, 2017 Sales revenue 3080000 Cost of goods sold Direct Material 784000 Direct Labor 238000 Factory Overhead 176700 Cost of goods sold 1198700 Gross profit 1881300 Operating expense Selling expenses: sales salaries and Commission 492500 advertising 84000 Miscellanious selling expense 63300 Total selling expense 639800 Administrative expenses: Office and officers salaries 262100 Supplies 31400 Miscellaneous administrative expense 43800 Total Administartive expense 337300 Total operating expense 977100 Income Before tax 904200 income tax expense 271000 Net Income 633200 Opening Cash balance 1,13,600 ADD net income 633200 ADD Depreciation 28000 Less Purchase of Fixed asset 1,56,000 Less Dividend 25000 Cash Balance 593800 Webster Publishing Co. Budgeted Balance Sheet December 31, 2017 Assets Current asset Cash 593800 Account receivable 2,19,200 Inventories Finished Goods 46,000 Work in Process 30,700 Materials 50400 1,27,100 Prepaid Expenses 3,700 Total current assets 9,43,800 Property, plant, and equipment: Plant and Equipment 7,33,100 Accumulated Depreciation—Plant and Equipment 276200 4,56,900 Total Asset 14,00,700 Liabilities Current liabilities Accounts Payable 2,11,600 Stockholders' Equity Common Stock, $10 par 250000 Retained Earnings Openning Balance 3,30,900 Add net Income 633200 Less Dividend 25000 939100 Total stockholders’ equity 1189100 Total liabilities and stockholders’ equity 1400700

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Budgeted Income Statement and Balance Sheet As a preliminary to requesting budge

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Budgeted Income Statement and Balance Sheet As a preliminary to requesting budge

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