Question

Following information relates to Acco Co. a. Beginning cash balance on July 1: $35,000. b. 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), $1,204,000; June (actual). $840,000; and July (budgeted), $980,000. c. Payments on merchandise purchases: 48% in the month of purchase and 52% in the month following purchase. Purchases amounts are: June (actual), $301,000; and July (budgeted) $600,000. d. Budgeted cash disbursements for salaries in July: $147.700. e. Budgeted depreciation expense for July: $8,400. f. Other cash expenses budgeted for July: $105,000. g. Accrued income taxes due in July: $80,000. h. Bank loan interest paid July 31: $4,620. Additional Information: a. Cost of goods sold is 35% of sales. b. Inventory at the end of June is $56,000 and at the end of July is $313,000. c. Salaries payable on June 30 are $35,000 and are expected to be $28,000 on July 31. d. The equipment account balance is $1,120,000 on July 31. On June 30, the accumulated depreciation on equipment is $196,000. e. The $4,620 cash payment of interest represents the 1% monthly expense on a bank loan of $462,000. f. Income taxes payable on July 31 are $132,398, and the income tax rate applicable to the company is 35%. g. The only other balance sheet accounts are: Common Stock, with a balance of $482,520 on June 30; and Retained Earnings, with a balance of $750,400 on June 30. Prepare a budgeted income statement for the month of July and a budgeted balance sheet for July 31. Calculation of cash receipts from sales Collected in- Total Sales May June July 31 Accounts Rec. July Credit sales from May June July Totals $ 1,204.000 840,000 980,000 $3.024.000 5 0 5 0S 0S

Answer 1

1 calculation sale credit may June of cash receipt from sale collection in July 31 Totalsale & may (1) Tane G) July (6) Account Rec 1 24%) (50%) 126%) 1,204,000 288,960 602000 315040 1204000 840,000 20,1600 420,000 218,400 840000 9 S 9000 235,200 290000 254.800 980000 3024000 725760 15,12000786240 30, 24000 total. o calculation of cash payment for merchandise paid in July total purchase Tuna (6) TOYS) Account pays - purchase L 48% 52%. June 301000 1144,480 156520 301000 July Gogooo 288,000 312000 6ooooo Totals 1901000 432,480 4 68,520 90looo Acco company Ridge Budgeted Income statment - Far month Ended July 31 980000 343000 637000 Sales less cost ct a Goosi Protit operating expenses salaries (828000+ 8 8147700 - $ 35000) Deprecation other expenses interest Income before tax Income tax (357) Net Income 140700 8,400 4620 378,280 132298 245882

Rudgeted calance sheet As of July 31 tssets. cunent Assets. Inventary cash (635000+8 786,240- 8 468,520 - $147700-$4620- $ 80,000 - $105ooo) 312000 15400 328-400 | Equipment less Accoonces ated deprec atian 120,000 196000 924000 8400 915600 Iless. Depreciations rutal Assets 112 44000 Liabilities cuorent liabilities salary payable Income tax payable 28000 132398 1160,398 462000 Bank loan stock holds Equity common stocle 482520 Retained Ipad met Earning Income 750,400 996282= 245882 Total li bilches and Equity 110/200