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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,

Following information relates to Acco Co.

  1. Beginning cash balance on July 1: $50,000.
  2. Cash receipts from sales: 27% is collected in the month of sale, 50% in the next month, and 23% in the second month after 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.
  3. Payments on merchandise purchases: 54% in the month of purchase and 46% in the month following purchase. Purchases amounts are: June (actual), $430,000; and July (budgeted), $600,000.
  4. Budgeted cash payments for salaries in July: $211,000.
  5. Budgeted depreciation expense for July: $12,000.
  6. Other cash expenses budgeted for July: $150,000.
  7. Accrued income taxes due in July: $80,000.
  8. Bank loan interest paid in July: $6,600.

Additional Information:

  1. Cost of goods sold is 40% of sales.
  2. Inventory at the end of June is $80,000 and at the end of July is $120,000.
  3. Salaries payable on June 30 are $50,000 and are expected to be $40,000 on July 31.
  4. The equipment account balance is $1,600,000 on July 31. On June 30, the accumulated depreciation on equipment is $280,000.
  5. The $6,600 cash payment of interest represents the 1% monthly expense on a bank loan of $660,000.
  6. Income taxes payable on July 31 are $164,640, and the income tax rate is 35%.
  7. The only other balance sheet accounts are Common Stock, with a balance of $661,800 on June 30; and Retained Earnings, with a balance of $1,072,000 on June 30.

Make a budgeted income statement for the month of July and a budgeted balance sheet for July 31.

  • Calculation: Calculate the budgeted cash receipts and cash payments.
  • Inc Stmt Bal Sheet: Make a budgeted income statement for the month of July and a budgeted balance sheet for July 31.

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