As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 2013, the following tentative trial balance as of December 31, 2012, is prepared by the Accounting Department of Franklin Publishing Co.
Cash......................$ 22,000
Accounts Receivable....$24,500
Finished Goods..........$14,300
Work in Process.........$3,500
Materials..................$5,100
Prepaid Expenses.........$400
Plant and Equipment...$5,000
Accumulated Depreciation - Plant and Equipment...$26,000
Accounts Payable........................................$17,900
Common Stock, $1.50 par..............................$45,000
Retained Earnings.........................................$35,900
--------- ------------
$124,800 $124,800
Factory output and sales for 2013 are expecteed to total $3,200 units of product, which are to be sold at $100 per unit. The quantities and costs of the inventories at December 31, 2013, 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 summarizedas follows:
Estimates Costs and Expenses
Fixed Variable
Costs of goods manufactured and sold:
Direct Materials............................................- $25.00
Direct Labor.................................................. - $7.80
Factory Overhead:
Depreciation of plant and equipt $3,200 -
Other factory overhead $1,100 4.50
Selling expenses:
Sales salaries and commissions $10,500 12.80
Advertising $11,800 -
Misc selling expenses 900 2.00
Administrative expenses:
Office and officers salaries 7,400 6.25
Supplies 400 1.00
Misc administrative expense 200 1.50
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 $26,000 on 2013 taxable income will be paid during 2013. Regular quarterly cash dividends of $0.15 per share are expected to be declared and paid in March, June, September, and December on 30,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $17,500 cash in May.
Sales are $32,000 , Total operating expenses are $106,500, Total current assets are $144,580, and cash balance is $81,680.
1. Prepare a budgeted income statement for 2013.
2. Prepare a budgeted balance sheet as of December 31, 2013, with supporting calculations.