Exercise 22-25A Merchandising: Preparing a budgeted income statement and balance sheet LO P4 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 amounts are: June (actual), $430,000; and July (budgeted), $600,000. d. Budgeted cash disbursements for salaries in July: $211,000 e. Budgeted depreciation expense for July: $12,000 f. Other cash expenses budgeted for July: $150,000 g. Accrued income taxes due in July: $80,000 h. Bank loan interest paid July 31: $6,600 Additional Information: a. Cost of goods sold is 44% of sales. b. Inventory at the end of June is $80,000 and at the end of July is $64,000 c. Salaries payable on June 30 are $50,000 and are expected to be $40,000 on July 31. d. The equipment account balance is $1,600,000 on July 31. On June 30, the accumulated depreciation on equipment is $280,000. e. The $6,600 cash payment of interest represents the 1% monthly expense on a bank loan of $660,000 f. Income taxes payable on July 31 are $145,040, 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 $600,000 on June 30; and Retained Earnings, with a balance of $1,072,000 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 July 31 Total Sales May June July Accounts Rec. Credit sales from 1,720,000 May 1,200,000 June 1,400,000 July 0 S 0 0 S 0 Totals 4,320,000