Question

Following information relates to Acco Co.

1. Beginning cash balance on July 1: $45,000.
2. Cash receipts from sales: 24% is collected in the month of sale, 50% in the next month, and 26% 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: 48% in the month of purchase and 52% 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 35% of sales.
2. Inventory at the end of June is $72,000 and at the end of July is $231,000.
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 $194,544, and the income tax rate is 40%.
7. The only other balance sheet accounts are Common Stock, with a balance of $643,240 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.

There was a second part to my original question Prepare a budgeted income statement for the month of July and a budgeted balance sheet for July 31.

Answer 1

	Collection of Cash receipts from sales
		collected in
Credit sales from					July 31
	Total Sales	May	June	July	Accounts Receivable
May	15,48,000	3,71,520	7,74,000	4,02,480
June	10,80,000		2,59,200	5,40,000	2,80,800
July	12,60,000			3,02,400	9,57,600
Total	38,88,000	3,71,520	10,33,200	12,44,880	12,38,400
	Collection of Cash Payments for merchandise
		Paid in
Purchases from				July 31
	Total Purchases	June	July	Accounts Payable
June	3,87,000	1,85,760	2,01,240	-
July	6,00,000		2,88,000	3,12,000
	9,87,000	1,85,760	4,89,240	3,12,000
ACCO COMPANY
Budgeted Income Statement
For the Month ended July 31
Sales		12,60,000
Cost of Goods Sold		4,41,000
Gross Profit		8,19,000
Operating Expenses
Salary	1,80,900
(189900-9000)
Depreciation	10,800
Other Cash Expenses	1,35,000
Bank Loan Interest	5,940
Total Operating Expenses		3,32,640
Income Before Taxes		4,86,360
Income Tax(40%)		1,94,544
Net Income		2,91,816
ACCO COMPANY
Budgeted Balance Sheet
As on 31st July
Asset
Cash Balances(Balancing Figure)
(3036400-2646600)	3,89,800
Accounts Receivable	12,38,400
Inventory	2,31,000
Total Current Asset		18,59,200
Equipment	14,40,000
Accumulated Depreciation	2,62,800
(252000+10800)
Equipment Net		11,77,200
Total Asset		30,36,400
Liablities and Equity
Liabilities
Accounts Payable	3,12,000
Salary Payable	36,000
Income Tax Payable	1,94,544
Total Current Liablity		5,42,544
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