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1. Prepare a budgeted income statement for 2017. 2. Prepare a budgeted balance sheet as of December 31, 2017, with supporting calculations.

1. Prepare a budgeted income statement for 2017. 2. Prepare a budgeted balance sheet as of December 31, 2017, with supporting calculations.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please read the direcitons on the first picture and answer the problems on the second picture. Thanks for your time. 

A B PROBLEN 22-5A Question 1 Regina Soap Co.. Budgeted Income Statement For the Year Ending December 31, 2021 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 expenses Total selling expenses Administrative expenses: Office and officers salaries Supplies Miscellaneous administrative expense Total administrative expenses Total operating expenses Income before income tax Income tax expense Net income Question 2 Regina Soap Co. Budgeted Balance Sheet December 31, 2021 C Current assets: Cash Accounts receivable Inventories: Finished goods Work in process Current liabilities: Accounts payable Materials Prepaid expenses Total current assets Property, plant, and equipment: Plant and equipment Less accumulated depreciation Total assets ASSETS Common stock Retained earnings LIABILITIES STOCKHOLDERS' EQUITY Total stockholders' equity Total liabilities and stockholders' equity D E F G
Transcribed Image Text:A B PROBLEN 22-5A Question 1 Regina Soap Co.. Budgeted Income Statement For the Year Ending December 31, 2021 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 expenses Total selling expenses Administrative expenses: Office and officers salaries Supplies Miscellaneous administrative expense Total administrative expenses Total operating expenses Income before income tax Income tax expense Net income Question 2 Regina Soap Co. Budgeted Balance Sheet December 31, 2021 C Current assets: Cash Accounts receivable Inventories: Finished goods Work in process Current liabilities: Accounts payable Materials Prepaid expenses Total current assets Property, plant, and equipment: Plant and equipment Less accumulated depreciation Total assets ASSETS Common stock Retained earnings LIABILITIES STOCKHOLDERS' EQUITY Total stockholders' equity Total liabilities and stockholders' equity D E F G
PR 22-5A 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 Accounts Receivable... Finished Goods Work in Process Materials... Prepaid Expenses Plant and Equipment Accumulated Depreciation-Plant and Equipment Accounts Payable..... Common Stock, $10 par Retained Earnings... Cost of goods manufactured and sold: Direct materials.. Direct labor... Factory overhead: Depreciation of plant and equipment.. Other factory overhead.... $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. Selling expenses: Sales salaries and commissions... Advertising........ Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows: Miscellaneous selling expense $ 85,000 125,600 Administrative expenses: 69,300 32,500 Office and officers salaries Supplies..... Miscellaneous administrative expense. 48,900 2,600 325,000 Estimated Costs and Expenses Variable (Per Unit Sold) Fixed (Total for Year) $156,200 62,000 180,000 290,700 $688,900 $40,000 12,000 46,000 64,000 6,000 72,400 5,000 4,000 $1.10 0.65 0.40 0.45 0.25 0.12 0.10 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.
Transcribed Image Text:PR 22-5A 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 Accounts Receivable... Finished Goods Work in Process Materials... Prepaid Expenses Plant and Equipment Accumulated Depreciation-Plant and Equipment Accounts Payable..... Common Stock, $10 par Retained Earnings... Cost of goods manufactured and sold: Direct materials.. Direct labor... Factory overhead: Depreciation of plant and equipment.. Other factory overhead.... $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. Selling expenses: Sales salaries and commissions... Advertising........ Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows: Miscellaneous selling expense $ 85,000 125,600 Administrative expenses: 69,300 32,500 Office and officers salaries Supplies..... Miscellaneous administrative expense. 48,900 2,600 325,000 Estimated Costs and Expenses Variable (Per Unit Sold) Fixed (Total for Year) $156,200 62,000 180,000 290,700 $688,900 $40,000 12,000 46,000 64,000 6,000 72,400 5,000 4,000 $1.10 0.65 0.40 0.45 0.25 0.12 0.10 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.
Expert Solution
Notes

It has been assumed that there is a mistype error in question related to year i.e. 2017 and 2021.

Cash = 85000-(180000*0.15*4)-75000+Net Income+40000

where 85000 is the beginning balance, 180000*0.15*4 is the cash dividend and 40000 is the depreciation.

Depreciation is added back as it is a non cash expense.

All sales and expenses along with cost of goods sold is considered to be of cash nature.

Retained earnings = 290700+Net income-(180000*0.15*4)

New fixed asset purchased = 75000

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