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.: Cash $109,300     Accounts Receivable 201,100     Finished Goods 42,200     Work in Process 28,200     Materials 46,300     Prepaid Expenses 3,400     Plant and Equipment 524,600     Accumulated Depreciation—Plant and Equipment     $225,600 Accounts Payable     167,500 Common Stock, $10 par     300,000 Retained Earnings     262,000   $955,100   $955,100 Factory output and sales for 20Y9 are expected to total 26,000 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       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 $26,000   _     Other factory overhead 8,100   5   Selling expenses:     Sales salaries and commissions 93,300   14   Advertising 78,000   _   Miscellaneous selling expense 6,800   2   Administrative expenses:     Office and officers salaries 61,400   7   Supplies 3,100   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 $251,900 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 $142,000 cash in May. Required: 1.  Prepare a budgeted income statement for 20Y9. Regina Soap Co. Budgeted Income Statement For the Year Ending December 31, 20Y9 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 administrative expense        Total administrative expenses       Total operating expenses       Income before income tax     $ Income tax expense        Net income      $

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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  1. 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.:

    Cash $109,300    
    Accounts Receivable 201,100    
    Finished Goods 42,200    
    Work in Process 28,200    
    Materials 46,300    
    Prepaid Expenses 3,400    
    Plant and Equipment 524,600    
    Accumulated Depreciation—Plant and Equipment     $225,600
    Accounts Payable     167,500
    Common Stock, $10 par     300,000
    Retained Earnings     262,000
      $955,100   $955,100

    Factory output and sales for 20Y9 are expected to total 26,000 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
          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 $26,000   _  
      Other factory overhead 8,100   5  
    Selling expenses:    
    Sales salaries and commissions 93,300   14  
    Advertising 78,000   _  
    Miscellaneous selling expense 6,800   2  
    Administrative expenses:    
    Office and officers salaries 61,400   7  
    Supplies 3,100   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 $251,900 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 $142,000 cash in May.

    Required:

    1.  Prepare a budgeted income statement for 20Y9.

    Regina Soap Co.
    Budgeted Income Statement
    For the Year Ending December 31, 20Y9
    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 administrative expense       
    Total administrative expenses      
    Total operating expenses      
    Income before income tax     $
    Income tax expense       
    Net income      $
     
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    Use information from the expected sales, cost of goods manufactured and sold, and selling and administrative expenses.

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

    Regina Soap Co.
    Budgeted Balance Sheet
    December 31, 20Y9
    Assets
    Current assets:      
    Cash    $  
    Accounts receivable       
    Inventories:      
    Finished goods  $    
    Work in process       
    Materials       
    Prepaid expenses       
    Total current assets     $
    Property, plant, and equipment:      
    Plant and equipment    $  
    Accumulated depreciation       
    Total property, plant, and equipment      
    Total assets     $
    Liabilities
    Current liabilities:      
    Accounts payable      $
    Stockholders' Equity
    Common stock    $  
    Retained earnings       
    Total stockholders’ equity      
    Total liabilities and stockholders’ equity     $
     
     
 
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