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 Mesa Publishing Co.: Cash. 26,000 Finished Goods.............................................. 16,900 Work in Process.............................................. 4,200 Materials.................................................... 6,400 Prepaid Expenses............................................ 600 Plant and Equipment......................................... 82,000 Accumulated DepreciationPlant and Equipment............. 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 manufacturing costs and operating expenses for the year are summarized as follows: Estimated Costs and Expenses Fixed Variable (Total for Year) (Per Unit Sold) Cost of goods manufactured and sold: Direct materials................................... 30.00 Direct labor....................................... 840 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. Instructions 1. Prepare a budgeted income statement for 20Y9. 2. Prepare a budgeted balance sheet as of December 31, 20Y9, with supporting calculations.
