s a preliminary torequesting budget estimates of sales, costs, and expenses for thefiscal year beginning January 1, 20Y9, the following tentativetrial balance as of December 31, 20Y8, is prepared by theAccounting Department of Regina Soap Co.:

Cash	$98,300
Accounts Receivable	187,800
Finished Goods	39,400
Work in Process	26,300
Materials	43,200
Prepaid Expenses	3,200
Plant and Equipment	463,000
Accumulated Depreciation—Plant and Equipment			$199,100
Accounts Payable			121,700
Common Stock, $10 par			350,000
Retained Earnings			190,400
	$861,200		$861,200

Factory output andsales for 20Y9 are expected to total 23,000 units of product, whichare to be sold at $120 per unit. The quantities and costs of theinventories at December 31, 20Y9, are expected to remain unchangedfrom the balances at the beginning of the year.

Budget estimates ofmanufacturing costs and operating expenses for the year aresummarized as follows:

	Estimated Costs and Expenses
	Fixed (Total for Year)		Variable (Per Unit Sold)
Cost of goods manufactured and sold:
Direct materials	_		$30
Direct labor	_		9.5
Factory overhead:
Depreciation of plant and equipment	$23,000		_
Otherfactory overhead	7,100		5.5
Selling expenses:
Sales salaries andcommissions	82,600		15
Advertising	69,000		_
Miscellaneous sellingexpense	6,000		2.5
Administrative expenses:
Office and officerssalaries	54,300		7.5
Supplies	2,800		1
Miscellaneousadministrative expense	1,400		2

Balances of accountsreceivable, prepaid expenses, and accounts payable at the end ofthe year are not expected to differ significantly from thebeginning balances. Federal income tax of $250,400 on 20Y9 taxableincome will be paid during 20Y9. Regular quarterly cash dividendsof $1 per share are expected to be declared and paid in March,June, September, and December on 35,000 shares of common stockoutstanding. It is anticipated that fixed assets will be purchasedfor $125,000 cash in May.

Required:

1.Prepare a budgeted income statement for 20Y9.

Regina Soap Co.
Budgeted Income Statement
Forthe Year Ending December 31, 20Y9
Sales			$
Cost of goods sold:
Directmaterials		$
Directlabor
Factoryoverhead
Cost of goods sold
Gross profit			$
Operating expenses:
Selling expenses:
Sales salaries andcommissions	$
Advertising
Miscellaneousselling expense
Total selling expenses		$
Administrativeexpenses:
Office and officerssalaries	$
Supplies
Miscellaneousadministrative expense
Total administrativeexpenses
Total operatingexpenses
Income before incometax			$
Income taxexpense
Netincome			$

Feedback

Use information fromthe expected sales, cost of goods manufactured and sold, andselling and administrative expenses.

Learning Objective 4,Learning Objective 5.

2.Prepare a budgeted balance sheet as of December 31, 20Y9.

Regina Soap Co. Budgeted Balance Sheet December 31, 20Y9
Assets
Current assets:
Cash		$
Accountsreceivable
Inventories:
Finishedgoods	$
Work inprocess
Materials
Prepaidexpenses
Total currentassets			$
Property, plant, and equipment:
Plant andequipment		$
Accumulateddepreciation
Total property, plant, and equipment
Total assets			$
Liabilities
Current liabilities:
Accountspayable			$
Stockholders'Equity
Common stock		$
Retained earnings
Total stockholders’equity
Total liabilities and stockholders’ equity			$

Feedback

Do not forget toinclude inventories of finished goods, work in process, andmaterials as assets in the balance sheet.

Calculate the endingretained earnings balance. Include the remaining assets,liabilities, and stockholders' equity.