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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.:

Account Title	Debit Balance	Credit Balance
Cash	$104,500
Accounts Receivable	186,000
Finished Goods	39,100
Work in Process	26,000
Materials	42,800
Prepaid Expenses	3,200
Plant and Equipment	506,800
Accumulated DepreciationPlant and Equipment		$217,900
Accounts Payable		152,300
Common Stock, $10 par		300,000
Retained Earnings		238,200
Total	$908,400	$908,400

Factory output and sales for 20Y9 are expected to total 25,000 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:

Estimated Costs and Expenses

Line Item Description	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	$25,000	_
Other factory overhead	7,800	5
Selling expenses:
Sales salaries and commissions	89,800	14
Advertising	75,000	_
Miscellaneous selling expense	6,500	2
Administrative expenses:
Office and officers salaries	59,000	7
Supplies	3,000	1
Miscellaneous administrative expense	1,600	1.5

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 $242,200 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 30,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $137,000 cash in May.

Required:

Question Content Area

1. Prepare a budgeted income statement for 20Y9.

Regina Soap Co. Budgeted Income Statement For the Year Ending December 31, 20Y9

Line Item Description	Amount	Amount	Amount
Gross profitIncome before income taxInterest expenseInterest revenueSalesSales			$Sales
Cost of goods sold:
Direct materialsIncome tax expenseMiscellaneous selling expenseOffice and officers salariesSuppliesDirect materials		$Direct materials
Direct laborGross profitIncome tax expenseMiscellaneous administrative expenseSalesDirect labor		Direct labor
AdvertisingFactory overheadIncome tax expenseSales salaries and commissionsSalesFactory overhead		Factory overhead
Cost of goods sold			Cost of goods sold
Gross profit			$Gross profit
Operating expenses:
Selling expenses:
Income tax expenseNet lossSales salaries and commissionsSalesSuppliesSales salaries and commissions	$Sales salaries and commissions
AdvertisingDirect laborDirect materialsFactory overheadNet lossAdvertising	Advertising
Gross profitIncome tax expenseMiscellaneous selling expenseSalesSuppliesMiscellaneous selling expense	Miscellaneous selling expense
Total selling expenses		$Total selling expenses
Administrative expenses:
AdvertisingIncome tax expenseOffice and officers salariesSales salaries and commissionsSalesOffice and officers salaries	$Office and officers salaries
AdvertisingDirect materialsFactory overheadNet lossSuppliesSupplies	Supplies
Gross profitIncome tax expenseMiscellaneous administrative expenseMiscellaneous selling expenseSalesMiscellaneous administrative expense	Miscellaneous administrative expense
Total administrative expenses		Total administrative expenses
Total operating expenses			Total operating expenses
Income before income tax			$Income before income tax
AdvertisingDirect materialsFactory overheadIncome tax expenseSuppliesIncome tax expense			Income tax expense
Gross profitNet incomeNet lossNet income			$Net income

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Use information from the expected sales, cost of goods manufactured and sold, and selling and administrative expenses.

Question Content Area

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

Regina Soap Co. Budgeted Balance Sheet December 31, 20Y9

Line Item Description	Amount	Amount	Amount
Assets
Current assets:
fill in the blank 1 of 28 Accounts payableCashCommon stockMaterialsPlant and equipmentCash		fill in the blank 2 of 28$
fill in the blank 3 of 28 Accounts payableAccounts receivablePlant and equipmentRetained earningsWork in processAccounts receivable		fill in the blank 4 of 28
Inventories:
fill in the blank 5 of 28 Accumulated depreciationCashCommon stockFinished goodsPlant and equipmentFinished goods	fill in the blank 6 of 28$
fill in the blank 7 of 28 Accounts payableCashPlant and equipmentPrepaid expensesWork in processWork in process	fill in the blank 8 of 28
fill in the blank 9 of 28 Accounts payableCashCommon stockMaterialsPlant and equipmentMaterials	fill in the blank 10 of 28
Total		fill in the blank 11 of 28
fill in the blank 12 of 28 Accounts payablePlant and equipmentPrepaid expensesRetained earningsWork in processPrepaid expenses		fill in the blank 13 of 28
Total current assets			fill in the blank 14 of 28$
Property, plant, and equipment:
fill in the blank 15 of 28 Accounts receivableCashCommon stockMaterialsPlant and equipmentPlant and equipment		fill in the blank 16 of 28$
fill in the blank 17 of 28 Accounts payableAccumulated depreciationPrepaid expensesRetained earningsWork in processAccumulated depreciation		fill in the blank 18 of 28
Total property, plant, and equipment			fill in the blank 19 of 28
Total assets			fill in the blank 20 of 28$
Liabilities
Current liabilities:
fill in the blank 21 of 28 Accounts payableCashCommon stockMaterialsPlant and equipmentAccounts payable			fill in the blank 22 of 28$
Stockholders' Equity
fill in the blank 23 of 28 Accounts payableAccumulated depreciationCommon stockPlant and equipmentPrepaid expensesCommon stock		fill in the blank 24 of 28$
fill in the blank 25 of 28 Accumulated depreciationCashPlant and equipmentPrepaid expensesRetained earningsRetained earnings		fill in the blank 26 of 28
Total stockholders equity			fill in the blank 27 of 28
Total liabilities and stockholders equity			fill in the blank 28 of 28$

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