1.value:
25.00 points
Exercise 20-4 Merchandising: Preparing a budgeted income statement and balance sheet LO P2
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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 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 (related to June). |
| h. | Bank loan interest paid July 31: $4,620. |
| Additional Information: | |
| a. | Cost of goods sold is 44% of sales. |
| b. | Inventory at the end of June is $56,000 and at the end of July is $224,800. |
| 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 $101,528, 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 $396,000 on June 30; and Retained Earnings, with a balance of $750,400 on June 30. |
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Prepare a budgeted income statement for the month of July and a budgeted balance sheet for July 31 |