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CengageNowv2 | Online teaching and learming resource from Cengage Leaming- Internet Explore ter 6 Homework eBook Calculato Instructions Part 1: Budgeted Income Statement Part 2: Budgeted Balance Sheet Instructions Budgeted Income Statement and Balance Sheet As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning Janusry 1, 2017, the following tentative rial balance as of December 31, 2016, is prepared by the Accounting Department of Webster Publishing Co. Cash Accounts Receivable Finished Goods Work in Process Materials Prepaid Expenses Plant and Equipment $110,400 187,700 9,400 26,300 43,200 3,200 505,600 Accumulated Depreciation-Plant and Equipment $217,400

Explanation / Answer

Webster Publishing Company Budgeted Income Statement For the year ended 31st Dec. 2017 Sales(25,000 units @ $90) $       2,250,000 Less: Direct material @ $23 per unit $        575,000 Direct labor @ $7 per unit $        175,000 Factory overhead: Depreciation on plant and equipment $          25,000 Other factory overhead (@ $4 $        100,000 Fixed other factory overhead $            7,800 Cost of goods sold $          882,800 Gross profit $       1,367,200 Less: Operating expenses: Selling expenses: Sales salaries and commission($89,800+$11.50 per unit) $        377,300 Advertising $          75,000 Misc. selling expenses($6,500+ $2 per unit) $          56,500 Total selling expenses: $        508,800 Administrative expenses: Office and officers salaries($59,000+$5.50 per unit) $        196,500 Misc. administrative expenses ($1,600+$1.50 per unit) $          39,100 supplies($3,000+$1 per unit) $          28,000 Total administrative expenses $        263,600 Total operating expenses $          772,400 Income before income tax $          594,800 Income Tax $          178,400 Income after tax $          416,400 Webster Publishing Company Budgeted Balance sheet For the year ended 31st Dec. 2017 Amount Amount Current Assets Cash: $        389,800 Accounts Receivables $        187,700 Finished Goods $          39,400 Work in process $          26,300 Materials $          43,200 Prepaid expenses $            3,200 Plant and equipment $        642,600 Accumulated Depreciation $          242,400 Accounts payable $          174,900 Common stock $10 par $          250,000 Retained Earnings $          664,900 Total $     1,332,200 $       1,332,200 Cash balance as on 31st Dec. 2017 is as under: Cash opening balance $        110,400 Net income $        416,400 Depreciation $          25,000 Less: Purchase of equipment $      (137,000) Dividend $        (25,000) Cash ending balance $        389,800 Plant and Equipment: Beginning balance $        505,600 Purchased $        137,000 Closing balance $        642,600 Accumulated Depreciation: Opening balance $        217,400 Depreciaiton for the year $          25,000 Closing balance $        242,400 Retained Earnings: Beginning balance $        273,500 Net Income $        416,400 Less: Dividend $        (25,000) Retained Earnings (Ending) $        664,900

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