PROBLEM 8-20 Cash Budget; Income Statement; Balance Sheet [L02, L04, L08, L09, L010] The balance sheet of Phototec, Inc., a distributor of photographic supplies, as of May 31 is given below: Phototec, Inc. Balance Sheet May 31 Assets Cash . . . . . . . . .. $ 8,000 Accounts receivable . . .. 72,000 Inventory . . . . . . . 30,000 Buildings and equipment, net of depreciation . 500,000 Total assets . . . . $610,000 Liabilities and Stockholders' Equity Accounts payable . . $ 90,000 Note payable. . . 15,000 Capital stock . . . . 420,000 Retained earnings . 85,000 Total liabilities and stockholders' equity . . $610,000 The company is in the process of preparing a budget for June and has assembled the following data: a. Sales are budgeted at $250,000 for June. Of these sales, $60,000 will be for cash; the remain- der will be credit sales. One-half of a month's credit sales are collected in the month the sales are made, and the remainder is collected the following month. All of the May 31 accounts receivable will be collected in June. b. Purchases of inventory are expected to total $200,000 during June. These purchases will all be on account. Forty percent of all inventory purchases are paid for in the month of purchase; the remainder are paid in the following month. All of the May 31 accounts payable to suppliers will be paid during June. C. The June 30 inventory balance is budgeted at $40,000. d. Selling and administrative expenses for June are budgeted at $51,000, exclusive of deprecia- tion. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month. e. The note payable on the May 31 balance sheet will be paid during June. The company's inter- est expense for June (on all borrowing) will be $500, which will be paid in cash. f. New warehouse equipment costing $9,000 will be purchased for cash during June. g- During June, the company will borrow $18,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year. Required: 1. Prepare a cash budget for June. Support your budget with a schedule of expected cash collect tions from sales and a schedule of expected cash disbursements for inventory purchases. 2. Prepare a budgeted income statement for June. Use the absorption costing income statement format as shown in Schedule 9. 3. Prepare a budgeted balance sheet as of June 30.PHOTOTEC, INC. Balance Sheet May 31 Assets Cash $ 8,000 Accounts receivable 72,000 Inventory 30,000 Buildings and equipment, net of depreciation 500,000 Total assets $ 610,000 Liabilities and Stockholders' Equity Accounts payable $ 90,000 Note payable 15,000 Capital stock 420,000 Retained earnings 85,000 Total liabilities and stockholders' equity $ 610,000 Budgeted Data relating to June: Budgeted sales 250,000 Budgeted sales in cash (remainder credit) 60,000 Percent of credit sales collected in same month 50% May accounts receivable collected 100% Expected inventory purchases $ 200,000 Purchases paid for in cash in month purchased 40% May accounts payable paid 100% Budgeted inventory balance, June 30 40,000 Budgeted selling and admin. expenses 51,000 Budgeted depreciation 2,000 Existing note payable paid 100% Interest expense 500 Equipment purchases 9,000 New note 18,000PHOTOTEC, INC. Schedule of cash receipts: Cash sales-June Collections on accounts receivable: May 31 balance June Total cash receipts Schedule of cash payments for purchases: May 31 accounts payable balance June purchases Total cash payments PHOTOTEC, INC. Cash Budget For the Month of June Cash balance, beginning Add receipts from customers Total cash available Less disbursements: Purchase of inventory Selling and administrative expenses Purchases of equipment Total cash disbursements Excess of receipts over disbursements Financing: Borrowings-note Repayments-note Interest Total financing Cash balance, endingPHOTOTEC, INC. Budgeted Income Statement For the Month of June Sales Cost of goods sold: Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income 3. PHOTOTEC, INC. Budgeted Balance Sheet June 30 Assets Cash Accounts receivable Inventory Plant and equipment, net of depreciation Total assets Liabilities and Equity Accounts payable Note payable Capital stock Retained earnings Total liabilities and equity