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 budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Regina Soap Co.:

Factory output and sales for 20Y9 are expected to total 27,000 units of product, which are to be sold at $110 per unit. The quantities and costs of the inventories at December 31, 20Y9, 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 $261,600 on 20Y9 taxable income will be paid during 20Y9. 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 $146,000 cash in May.

Required:

1. Prepare a budgeted income statement for 20Y9.

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B. Prepare a budgeted balance sheet as of December 31, 20Y9.

Cash $118,900 Accounts Receivable 217,600 Finished Goods 45,700 Work in Process 30,500 Materials 50,000 Prepaid Expenses 3,700 Plant and Equipment 542,200 Accumulated Depreciation—Plant and Equipment $233,100 Accounts Payable 204,900 Common Stock, $10 par 250,000 Retained Earnings 320,600 $1,008,600 $1,008,600

Explanation / Answer

Working:

REGINA SOAP COMPANY Budgeted Income Statement for the year ending December 31, 20Y9 Sales 2970000 Cost of goods sold:    Direct material 756000    Diret labor 229500    Factory overhead 170400 Cost of goods sold 1155900 Gross Profit 1814100 Operating Expenses Selling Expenses: Sales salaries and commissions 474900 Advertising 81000 Miscellaneous selling expenses 61000 Total selling expeses 616900 Administrative expenses    Office and officers salaries 252700     Supplies 30200     Miscellaneous admn.expenses 42200 Total administrative expesnses 325100 Total Operating Expenses 942000 Income before taxes 872100 Income Taxes 261600 Net income 610500

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