Cash $ 85,000 Accounts Receivable 125,600 Finished Goods 69,300 Work in Process 32,500 Materials 48,900 Prepaid Expenses 2,600 Plant and Equipment 325,000 Accumulated Depreciation-Plant and Equipment $156,200 Accounts Payable 62,000 Common Stock, $ 10 par 180,000 Retained Earnings 290,700 $688,900 $688,900 Estimated Costs and Expenses Fixed Variable (Total for Year) (Per Unit Sold) Cost of goods manufactured and sold: Direct materials $1.10 Direct labor 0.65 Factory overhead: Depreciation of plant and equipment $40,000 Other factory overhead 12,000 0.40 Selling expenses: Sales salaries and commissions 46,000 0.45 Advertising 64,000 Miscellaneous selling expense 6,000 0.25 Administrative expenses: Office and officers salaries 72,400 0.12 Supplies 5,000 0.10 Miscellaneous administrative 4.000 0.05 expense

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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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, 20Y4, the following tentative trial balance as of December 31,
20Y3, is prepared by the Accounting Department of Regina Soap Co.:

REFER IMAGE 

Factory output and sales for 20Y4 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,
20Y4, 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:

REFER IMAGE 

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 20Y4 taxable income will be paid during 20Y4. Regular quarterly
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 20Y4.
2. Prepare a budgeted balance sheet as of December 31, 20Y4, with supporting
calculations.

 

Cash
$ 85,000
Accounts Receivable
125,600
Finished Goods
69,300
Work in Process
32,500
Materials
48,900
Prepaid Expenses
2,600
Plant and Equipment
325,000
Accumulated Depreciation-Plant and Equipment
$156,200
Accounts Payable
62,000
Common Stock, $ 10 par
180,000
Retained Earnings
290,700
$688,900 $688,900
Transcribed Image Text:Cash $ 85,000 Accounts Receivable 125,600 Finished Goods 69,300 Work in Process 32,500 Materials 48,900 Prepaid Expenses 2,600 Plant and Equipment 325,000 Accumulated Depreciation-Plant and Equipment $156,200 Accounts Payable 62,000 Common Stock, $ 10 par 180,000 Retained Earnings 290,700 $688,900 $688,900
Estimated Costs and Expenses
Fixed
Variable
(Total for
Year)
(Per Unit
Sold)
Cost of goods manufactured and sold:
Direct materials
$1.10
Direct labor
0.65
Factory overhead:
Depreciation of plant and equipment $40,000
Other factory overhead
12,000
0.40
Selling expenses:
Sales salaries and commissions
46,000
0.45
Advertising
64,000
Miscellaneous selling expense
6,000
0.25
Administrative expenses:
Office and officers salaries
72,400
0.12
Supplies
5,000
0.10
Miscellaneous administrative
4.000
0.05
expense
Transcribed Image Text:Estimated Costs and Expenses Fixed Variable (Total for Year) (Per Unit Sold) Cost of goods manufactured and sold: Direct materials $1.10 Direct labor 0.65 Factory overhead: Depreciation of plant and equipment $40,000 Other factory overhead 12,000 0.40 Selling expenses: Sales salaries and commissions 46,000 0.45 Advertising 64,000 Miscellaneous selling expense 6,000 0.25 Administrative expenses: Office and officers salaries 72,400 0.12 Supplies 5,000 0.10 Miscellaneous administrative 4.000 0.05 expense
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