EBZ Fashion is preparing a quarterly budget covering the 3 months ending 30 September 2020. The information

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EBZ Fashion is preparing a quarterly budget covering the 3 months ending 30 September 2020.

The information available for the budget is as follows.

1. Cash sales represent 80% of all monthly sales; credit sales are collected in the month after sale.

2. Inventory purchases that are made on account equal 60% of the sales forecast for that month;

30% of the purchases are paid for in the month of purchase, and 70% are paid for in the following month.

3. Ending inventory on 30 September 2020 is projected to be $57 800.

4. Equipment purchases at the end of September are budgeted at $95 000.

5. Other quarterly expenses are budgeted as follows: administration expenses, $14 700; utilities,

$55 000; salaries, $154 000; stationery, $4800. These expenses are paid when incurred.

6. Depreciation for the quarter is $18 000.

7. The balance sheet as at 1 July 2020 will have the following account balances.

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8. Budgeted sales are: July, $255 000; August, $272 000; September, $330 000.
Required

(a) Prepare a budgeted income statement and balance sheet for the quarter ending 30 September 2020. Ignore income tax.

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Accounting

ISBN: 9780730363224

10th Edition

Authors: John Hoggett, John Medlin, Keryn Chalmers, Beattie Claire, Hellmann Andreas, Maxfield Jodie

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