Budgeted Income Statement and Balance SheetAs 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 Mesa Publishing Co.: Cash$ 26,000Accounts Receivable23,800Finished Goods16,900Work in Process4,200Materials6,400Prepaid Expenses600Plant and Equipment82,000Accumulated Depreciation—Plant and Equipment$ 32,000Accounts Payable14,800Common Stock, $1.50 par30,000Retained Earnings83,100$159,900$159,900Factory output and sales for 20Y9 are expected to total 3,800 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:Estimated Costs and ExpensesFixed(Total for Year)Variable(Per Unit Sold)Cost of goods manufactured and sold:Direct materials_$30.00Direct labor_8.40Factory overhead:Depreciation of plant and equipment$ 4,000_Other factory overhead1,4004.80Selling expenses:Sales salaries and commissions12,80013.50Advertising13,200_Miscellaneous selling expense1,0002.50Administrative expenses:Office and officers salaries7,8007.00Supplies5001.20Miscellaneous administrative expense4002.40Balances 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 $35,000 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of $0.20 per share are expected to be declared and paid in March, June, September, and December on 20,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $22,000 cash in May.Required:1. Prepare a budgeted income statement for 20Y9. Mesa Publishing Co.Budgeted Income StatementFor 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 $ $2. Prepare a budgeted balance sheet as of December 31, 20Y9. Mesa Publishing Co.Budgeted Balance SheetDecember 31, 20Y9AssetsCurrent assets:$ Inventories: $ Total current assets$Property, plant, and equipment:$ Total property, plant, and equipment Total assets$LiabilitiesCurrent liabilities:$Stockholders' Equity $ Total stockholders’ equity Total liabilities and stockholders’ equity
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative
Cash
$ 26,000
Accounts Receivable
23,800
Finished Goods
16,900
Work in Process
4,200
Materials
6,400
Prepaid Expenses
600
Plant and Equipment
82,000
Accumulated
$ 32,000
Accounts Payable
14,800
Common Stock, $1.50 par
30,000
Retained Earnings
83,100
$159,900
$159,900
Factory output and sales for 20Y9 are expected to total 3,800 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
Estimated Costs and Expenses
Fixed
(Total for Year)
Variable
(Per Unit Sold)
Cost of goods manufactured and sold:
Direct materials
_
$30.00
Direct labor
_
8.40
Factory overhead:
Depreciation of plant and equipment
$ 4,000
_
Other factory overhead
1,400
4.80
Selling expenses:
Sales salaries and commissions
12,800
13.50
Advertising
13,200
_
Miscellaneous selling expense
1,000
2.50
Administrative expenses:
Office and officers salaries
7,800
7.00
Supplies
500
1.20
Miscellaneous administrative expense
400
2.40
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 $35,000 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of $0.20 per share are expected to be declared and paid in March, June, September, and December on 20,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $22,000 cash in May.
Required:
1. Prepare a budgeted income statement for 20Y9.
Mesa Publishing 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
$
$
2. Prepare a budgeted balance sheet as of December 31, 20Y9.
Mesa Publishing Co.
Budgeted Balance Sheet
December 31, 20Y9
Assets
Current assets:
$
Inventories:
$
Total current assets
$
Property, plant, and equipment:
$
Total property, plant, and equipment
Total assets
$
Liabilities
Current liabilities:
$
$
Total stockholders’ equity
Total liabilities and stockholders’ equity
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