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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 $108,700
Accounts Receivable 204,400
Finished Goods 42,900
Work in Process 28,600
Materials 47,000
Prepaid Expenses 3,500
Plant and Equipment 510,900
Accumulated Depreciation—Plant and Equipment $219,700
Accounts Payable 146,800
Common Stock, $10 par 350,000
Retained Earnings 229,500
$946,000 $946,000
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 35,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $138,000 cash in May.