Question

Following information relates to Acco Co.

1. Beginning cash balance on July 1: $45,000.
2. Cash receipts from sales: 21% is collected in the month of sale, 50% in the next month, and 29% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,548,000; June (actual), $1,080,000; and July (budgeted), $1,260,000.
3. Payments on merchandise purchases: 42% in the month of purchase and 58% in the month following purchase. Purchases amounts are: June (actual), $387,000; and July (budgeted), $600,000.
4. Budgeted cash payments for salaries in July: $189,900.
5. Budgeted depreciation expense for July: $10,800.
6. Other cash expenses budgeted for July: $135,000.
7. Accrued income taxes due in July: $80,000.
8. Bank loan interest paid in July: $5,940.

Additional Information:

1. Cost of goods sold is 31% of sales.
2. Inventory at the end of June is $72,000 and at the end of July is $281,400.
3. Salaries payable on June 30 are $45,000 and are expected to be $36,000 on July 31.
4. The equipment account balance is $1,440,000 on July 31. On June 30, the accumulated depreciation on equipment is $252,000.
5. The $5,940 cash payment of interest represents the 1% monthly expense on a bank loan of $594,000.
6. Income taxes payable on July 31 are $187,866, and the income tax rate is 35%.
7. The only other balance sheet accounts are Common Stock, with a balance of $698,860 on June 30; and Retained Earnings, with a balance of $964,800 on June 30.

  
Prepare a budgeted income statement for the month of July and a budgeted balance sheet for July 31.

Answer 1