Question

s 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 e 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 85,000 125,600 69,300 32,500 48,900 2,600 325,000 $156,200 62,000 180,000 290,700 $688,900 $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. Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows: Estimated Costs and Expenses Fixed Variable (Total for Year) (Per Unit Sold) Cost of goods manufactured and sold Direct materials Direct labor Factory overhead $1.10 0.65 Depreciation of plant and equipment Other factory overhead $40,000 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 Supplies Miscellaneous administrative expense 72,400 5,000 4,000 0.12 0.10 0.05 alances 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 017 taxable income will be paid during 2017. Regular quarterly cash dividends of $0.15 per share are expected to be dedlared and paid in March, June, September, and December on 18,000 shares of mon stock outstanding. It is anticipated that fixed assets will be purchased for $75,000 cash in May equired are a budgeted income statement for 2017 are a budgeted balance sheet as of December 31, 2017 1. Prepare a budgeted income statement for 2017 Regina Soap Co. Budgeted Income Statement For the Year Ending December 31, 2017 Cost of goods sold: Cost of goods sold Gross profit Operating expenses Selling expenses: Total selling expenses Administrative expenses: Total administrative expenses Total operating expenses Income before income tax 2. Prepare a budgeted balance sheet as of December 31, 2017. Regina Soap Co. Budgeted Balance Sheet December 31, 2017 Assets Current assets: Inventories: Total current assets Property, plant, and equipment: Total assets Liabilities Current liabilities: Stockholders' Equity Total stockholders' equity Total liabilities and stockholders' equity

Answer 1

Regina Soap Co.
Budgeted Income Statement
For the Year Ending December 31, 2017
All Value in ($)
Details	Fixed	Variable	Total
Sales			1,000,000
Cost of goods sold:
Direct materials		220,000	220,000
Direct labor		130,000	130,000
Factory overhead	52,000	80,000	132,000
Cost of goods sold			482,000
Gross profit			518,000
Operating expenses:
Selling expenses:
Sales salaries and commissions	46,000	90,000	136,000
Advertising	64,000		64,000
Miscellaneous selling expense	6,000	50,000	56,000
Total selling expenses		$	256,000
Administrative expenses:
Office and officers salaries	72,400	24,000	96,400
Supplies	5,000	20,000	25,000
Miscellaneous administrative expense	4,000	10,000	14,000
Total administrative expenses			135,400
Total operating expenses			391,400
Income before income tax			126,600
Income tax expense			30,000
Net income			96,600
Dividends paid			10,800
Addition to retained earning			85,800
. Prepare a budgeted balance sheet as of December 31, 2017.
Regina Soap Co.
Budgeted Balance Sheet
31-Dec-17
Assets
Current assets:
Cash	135,800	(balancing figure)
Accounts receivable	125,600
Inventories:
Finished goods	69,300
Work in process	32,500
Materials	48,900
Prepaid expenses	2,600
Total current assets	414,700
Property, plant, and equipment:	400,000
Plant and equipment
Less accumulated depreciation	196,200
Total assets	618,500
Liabilities
Current liabilities:
Accounts payable	62,000
Stockholders' Equity
Common stock	180,000
Retained earnings	376,500
Total stockholders' equity	556,500
Total liabilities and stockholders' equity	618,500