Following information relates to Acco Co. Beginning cash balance on July 1: $40,000. Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and 20% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,376,000; June (actual), $960,000; and July (budgeted), $1,120,000. Payments on merchandise purchases: 60% in the month of purchase and 40% in the month following purchase. Purchases amounts are: June (actual), $344,000; and July (budgeted), $600,000. Budgeted cash payments for salaries in July: $168,800. Budgeted depreciation expense for July: $9,600. Other cash expenses budgeted for July: $120,000. Accrued income taxes due in July: $80,000. Bank loan interest paid in July: $5,280. Additional Information: Cost of goods sold is 44% of sales. Inventory at the end of June is $64,000 and at the end of July is $171,200. Salaries payable on June 30 are $40,000 and are expected to be $32,000 on July 31. The equipment account balance is $1,280,000 on July 31. On June 30, the accumulated depreciation on equipment is $224,000. The $5,280 cash payment of interest represents the 1% monthly expense on a bank loan of $528,000. Income taxes payable on July 31 are $116,032, and the income tax rate is 35%. The only other balance sheet accounts are: Common Stock, with a balance of $464,000 on June 30; and Retained Earnings, with a balance of $857,600 on June 30. Prepare a budgeted income statement for the month of July and a budgeted balance sheet for July 31.
Budgeted income statement for the month of July and a budgeted balance sheet for July 31 is as prepared below:
Acco Co. | ||
Budgeted Income Statement | ||
For the month ended July 31 | ||
Particulars | Amount ($) | Amount ($) |
Sales | 1,120,000 | |
Less: Cost of goods sold (44% of sales) | 492,800 | |
Gross Profit | 627,200 | |
Less: expenses | ||
Salaries | 160,800 | |
Other Expenses | 120,000 | |
Depreciation | 9,600 | |
Interest Expense | 5,280 | |
295,680 | ||
Income before tax | 331,520 | |
Less: Income tax | 116,032 | |
Net Income | 215,488 | |
Acco Co. | ||
Budgeted balance Sheet | ||
Jul-31 | ||
Assets | ||
Cash | 259,520 | |
Accounts Receivable | 976,000 | |
Inventory | 171,200 | |
Equipment | 1,280,000 | |
Less: accumulated dep (224,000+9,600) | -233,600 | |
Total assets | 2,453,120 | |
Liabilities and Stockholders' Equity | ||
Accounts Payable purchases | 240,000 | |
Salaries payable | 32,000 | |
Income tax payable | 116,032 | |
Bank Loan | 528,000 | |
Common Stock | 464,000 | |
Retained earnings (857,600+215,488) | 1,073,088 | |
Total liabilities and stockholders' equity | 2,453,120 | |
Working:
Acco Co. | |
Schedule of expected Cash collections | |
Particulars | July |
Beginning Accounts Receivable | |
May sales (1,376,000*.2) | 275,200 |
June Sales (960,000*.5) | 480,000 |
July sales (1,120,000*.3) | 336,000 |
Total collections | 1,091,200 |
Account receivable for June Sale | 192000 |
Account receivable for July Sale | 784000 |
Acco Co | |
Schedule of expected Cash payments | |
Particulars | July |
Beginning Accounts Payable (a) | $137,600 |
July purchases (600,000*.6) | $360,000 |
Total payments (a+b+c+d) | $497,600 |
Acco Co. | |
Cash Budget | |
Particulars | July |
Beginning Cash balance | 40,000 |
Add: Collection from customers | $1,091,200 |
cash available for use | $1,131,200 |
Less: cash Disbursements | |
Merchandise purchase | $497,600 |
Salaries | 168,800 |
Other Expenses | 120,000 |
Interest Expense | 5,280 |
Income tax | 80,000 |
Total disbursement | 871,680 |
Cash surplus/Deficit | 259,520 |
Net cash from Financing | 0 |
Budgeted ending cash balance | 259,520 |
Following information relates to Acco Co. Beginning cash balance on July 1: $40,000. Cash receipts from...
Following information relates to Acco Co. Beginning cash balance on July 1: $40,000. Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and 20% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,376,000; June (actual), $960,000; and July (budgeted), $1,120,000. Payments on merchandise purchases: 60% in the month of purchase and 40% in the month following purchase. Purchases amounts are: June...
Following information relates to Acco Co. Beginning cash balance on July 1: $50,000. Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and 20% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,720,000; June (actual), $1,200,000; and July (budgeted), $1,400,000. Payments on merchandise purchases: 60% in the month of purchase and 40% in the month following purchase. Purchases amounts are: June...
Following information relates to Acco Co. Beginning cash balance on July 1: $50,000. Cash receipts from sales: 27% is collected in the month of sale, 50% in the next month, and 23% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,720,000; June (actual), $1,200,000; and July (budgeted), $1,400,000. Payments on merchandise purchases: 54% in the month of purchase and 46% in the month following purchase. Purchases amounts are: June...
Following information relates to Acco Co. Beginning cash balance on July 1: $30,000. Cash receipts from sales: 27% is collected in the month of sale, 50% in the next month, and 23% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,032,000; June (actual), $720,000; and July (budgeted), $840,000. Payments on merchandise purchases: 54% in the month of purchase and 46% in the month following purchase. Purchases amounts are: June...
Following information relates to Acco Co. Beginning cash balance on July 1: $30,000. Cash receipts from sales: 27% is collected in the month of sale, 50% in the next month, and 23% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,032,000; June (actual), $720,000; and July (budgeted), $840,000. Payments on merchandise purchases: 54% in the month of purchase and 46% in the month following purchase. Purchases amounts are: June...
Following information relates to Acco Co. a. Beginning cash balance on July 1: $50,000. b. Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and 20% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are May (actual), $1,720,000; June (actual), $1,200,000; and July (budgeted), $1,400,000. c. Payments on merchandise purchases: 60% in the month of purchase and 40% in the month following purchase. Purchases...
Following information relates to Acco Co. a. Beginning cash balance on July 1: $35,000. b. Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and 20% 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: 60% in the month of purchase and 40% in the month following purchase. Purchases...
Following information relates to Acco Co. a. Beginning cash balance on July 1: $35,000. b. Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and 20% 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: 60% in the month of purchase and 40% in the month following purchase. Purchases...
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...
Beginning cash balance on July 1: $30,000. Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and 20% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,032,000; June (actual), $720,000; and July (budgeted), $840,000. Payments on merchandise purchases: 60% in the month of purchase and 40% in the month following purchase. Purchases amounts are: June (actual), $258,000; and July (budgeted), $600,000....