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 $117,800     Accounts Receivable 208,500     Finished Goods 43,800     Work in Process 29,200     Materials 48,000     Prepaid Expenses 3,500     Plant and Equipment 548,900     Accumulated Depreciation—Plant and Equipment     $236,000 Accounts Payable     200,300 Common Stock, $10 par     250,000 Retained Earnings     313,400   $999,700   $999,700 Factory output and sales for 20Y9 are expected to total 27,000 units of product, which are to be sold at $100 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 _   $25   Direct labor _   8   Factory overhead:       Depreciation of plant and equipment $27,000   _     Other factory overhead 8,400   4.5   Selling expenses:     Sales salaries and commissions 96,900   12.5   Advertising 81,000   _   Miscellaneous selling expense 7,000   2   Administrative expenses:     Office and officers salaries 63,700   6.5   Supplies 3,200   1   Miscellaneous administrative expense 1,700   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 $229,200 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 25,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $148,000 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      $fill in the blank a8039006d02cfe8_2 Cost of goods sold:       Direct materials    $fill in the blank a8039006d02cfe8_4   Direct labor    fill in the blank a8039006d02cfe8_6   Factory overhead    fill in the blank a8039006d02cfe8_8   Cost of goods sold     fill in the blank a8039006d02cfe8_9 Gross profit     $fill in the blank a8039006d02cfe8_10 Operating expenses:       Selling expenses:       Sales salaries and commissions  $fill in the blank a8039006d02cfe8_12     Advertising  fill in the blank a8039006d02cfe8_14     Miscellaneous selling expense  fill in the blank a8039006d02cfe8_16     Total selling expenses   $fill in the blank a8039006d02cfe8_17   Administrative expenses:       Office and officers salaries  $fill in the blank a8039006d02cfe8_19     Supplies  fill in the blank a8039006d02cfe8_21     Miscellaneous administrative expense  fill in the blank a8039006d02cfe8_23     Total administrative expenses   fill in the blank a8039006d02cfe8_24   Total operating expenses     fill in the blank a8039006d02cfe8_25 Income before income tax     $fill in the blank a8039006d02cfe8_26 Income tax expense      fill in the blank a8039006d02cfe8_28 Net income      $fill in the blank a8039006d02cfe8_30   Feedback   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    $fill in the blank ce0bc1017faffc1_2   Accounts receivable    fill in the blank ce0bc1017faffc1_4   Inventories:       Finished goods  $fill in the blank ce0bc1017faffc1_6     Work in process  fill in the blank ce0bc1017faffc1_8     Materials  fill in the blank ce0bc1017faffc1_10 fill in the blank ce0bc1017faffc1_11   Prepaid expenses    fill in the blank ce0bc1017faffc1_13   Total current assets     $fill in the blank ce0bc1017faffc1_14 Property, plant, and equipment:       Plant and equipment    $fill in the blank ce0bc1017faffc1_16   Accumulated depreciation    fill in the blank ce0bc1017faffc1_18   Total property, plant, and equipment     fill in the blank ce0bc1017faffc1_19 Total assets     $fill in the blank ce0bc1017faffc1_20 Liabilities Current liabilities:       Accounts payable      $fill in the blank ce0bc1017faffc1_22 Stockholders' Equity Common stock    $fill in the blank ce0bc1017faffc1_24   Retained earnings    fill in the blank ce0bc1017faffc1_26   Total stockholders’ equity     fill in the blank ce0bc1017faffc1_27 Total liabilities and stockholders’ equity     $fill in the blank ce0bc1017faffc1_28

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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.:

Cash $117,800    
Accounts Receivable 208,500    
Finished Goods 43,800    
Work in Process 29,200    
Materials 48,000    
Prepaid Expenses 3,500    
Plant and Equipment 548,900    
Accumulated Depreciation—Plant and Equipment     $236,000
Accounts Payable     200,300
Common Stock, $10 par     250,000
Retained Earnings     313,400
  $999,700   $999,700

Factory output and sales for 20Y9 are expected to total 27,000 units of product, which are to be sold at $100 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 _   $25  
Direct labor _   8  
Factory overhead:    
  Depreciation of plant and equipment $27,000   _  
  Other factory overhead 8,400   4.5  
Selling expenses:    
Sales salaries and commissions 96,900   12.5  
Advertising 81,000   _  
Miscellaneous selling expense 7,000   2  
Administrative expenses:    
Office and officers salaries 63,700   6.5  
Supplies 3,200   1  
Miscellaneous administrative expense 1,700   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 $229,200 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 25,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $148,000 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      $fill in the blank a8039006d02cfe8_2
Cost of goods sold:      
Direct materials    $fill in the blank a8039006d02cfe8_4  
Direct labor    fill in the blank a8039006d02cfe8_6  
Factory overhead    fill in the blank a8039006d02cfe8_8  
Cost of goods sold     fill in the blank a8039006d02cfe8_9
Gross profit     $fill in the blank a8039006d02cfe8_10
Operating expenses:      
Selling expenses:      
Sales salaries and commissions  $fill in the blank a8039006d02cfe8_12    
Advertising  fill in the blank a8039006d02cfe8_14    
Miscellaneous selling expense  fill in the blank a8039006d02cfe8_16    
Total selling expenses   $fill in the blank a8039006d02cfe8_17  
Administrative expenses:      
Office and officers salaries  $fill in the blank a8039006d02cfe8_19    
Supplies  fill in the blank a8039006d02cfe8_21    
Miscellaneous administrative expense  fill in the blank a8039006d02cfe8_23    
Total administrative expenses   fill in the blank a8039006d02cfe8_24  
Total operating expenses     fill in the blank a8039006d02cfe8_25
Income before income tax     $fill in the blank a8039006d02cfe8_26
Income tax expense      fill in the blank a8039006d02cfe8_28
Net income      $fill in the blank a8039006d02cfe8_30
 
Feedback
 

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    $fill in the blank ce0bc1017faffc1_2  
Accounts receivable    fill in the blank ce0bc1017faffc1_4  
Inventories:      
Finished goods  $fill in the blank ce0bc1017faffc1_6    
Work in process  fill in the blank ce0bc1017faffc1_8    
Materials  fill in the blank ce0bc1017faffc1_10 fill in the blank ce0bc1017faffc1_11  
Prepaid expenses    fill in the blank ce0bc1017faffc1_13  
Total current assets     $fill in the blank ce0bc1017faffc1_14
Property, plant, and equipment:      
Plant and equipment    $fill in the blank ce0bc1017faffc1_16  
Accumulated depreciation    fill in the blank ce0bc1017faffc1_18  
Total property, plant, and equipment     fill in the blank ce0bc1017faffc1_19
Total assets     $fill in the blank ce0bc1017faffc1_20
Liabilities
Current liabilities:      
Accounts payable      $fill in the blank ce0bc1017faffc1_22
Stockholders' Equity
Common stock    $fill in the blank ce0bc1017faffc1_24  
Retained earnings    fill in the blank ce0bc1017faffc1_26  
Total stockholders’ equity     fill in the blank ce0bc1017faffc1_27
Total liabilities and stockholders’ equity     $fill in the blank ce0bc1017faffc1_28
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