As a preliminary to requesting budget estimates of sales, costs, and expenses fo

Question

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.:

Factory output and sales for 20Y9 are expected to total 25,000 units of product, which are to be sold at $120 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:

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 $272,200 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 35,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $136,000 cash in May.

Cash $101,600 Accounts Receivable 199,100 Finished Goods 41,800 Work in Process 27,900 Materials 45,800 Prepaid Expenses 3,400 Plant and Equipment 501,900 Accumulated Depreciation—Plant and Equipment $215,800 Accounts Payable 138,700 Common Stock, $10 par 350,000 Retained Earnings 217,000 $921,500 $921,500 1. Prepare a budgeted income statement for 20Y9. Regina Soap Co. Budgeted Income Statement For the Year Ending December 31, 20Y9 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

Explanation / Answer

1)

Budgted Income Statement

for the Year ending Dec-31,2019

Particulars

Sales

25000*120

Cost of Goods Sold

Direct Material

Depriciaiton of Plant

Less- Dividend Paid

(35000*1*4)

Add-Opening Balance

B)

Regina Soap Co.

Budgted Balance Sheet

for the Year ending Dec-31,2019

Regina Soap Co.

Budgted Income Statement

for the Year ending Dec-31,2019

(Amount in $)

Particulars

Amount

Sales

3000000

25000*120

Cost of Goods Sold

1157800

Direct Material

750000 Direct Labour 237500 Factory OH

Depriciaiton of Plant

25000 Other Factory OH Fixed 137500 Variable 7800 Gross Profit 1842200 Less- Operating Exp Selling Exp 621300 Sales Salaries & Commission Fixed 89800 Variable 375000 Advertising 75000 Misc Selling Exp Fixed 6500 Variable 75000 Adminstrative Exp 326100 Office & Officers Salary Fixed 59000 Variable 187500 Supplies Fixed 3000 Variable 25000 Misc Admi Exp Fixed 1600 Variable 50000 Income Before tax 894800 Less- Income Tax 272200 Income After Tax 622600

Less- Dividend Paid

140000

(35000*1*4)

Retained Earning 482600

Add-Opening Balance

217000 Closing Transfer to B/s 699600

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