P23-3A The Book Closet has applied for a loan. Westside Bank has requested a budgeted balance sheet at June 30, 20X5, and a budgeted statement of cash flows for June. As the con- troller (chief accounting officer) of The Book Closet, you have assembled the following infor- mation:

a. May 31 equipment balance, $60.600; accumulated depreciation, $11,700.

b. June capital expenditures of $15,800 budgeted for cash purchase of equipment.

c. June depreciation expense. $400.

d. Cost of goods sold. 50% of sales.

e. Other June operating expenses, including income tax, total $46,000, 75% of which will be paid in cash and the remainder accrued at June 30.

f. May 31 owners' equity, $104.800. g. May 31 cash balance. $40,900. h. June budgeted sales, $85,000, 30% of which is for cash. Of the remaining 70%, half will be collected in June and half in July. i. June cash collections on May sales, $15.300. j. June cash payments of liabilities for May inventory purchases on credit, $10,700. k. May 31 inventory balance. $10.400. 1. June purchases of inventory, $11,000 for cash and $30,600 on credit. Half the credit pur- chases will be paid in June and half in July. Required 1. Prepare the budgeted balance sheet for The Book Closet at June 30, 20X5. Show separate computations for cash, inventory, and owners' equity balances. 2. Prepare the budgeted statement of cash flows for June. 3. On the basis of this data, if you were a Westside Bank loan officer, would you grant The Book Closet a loan? Give your reason.