PROBLEM 8-20 Cash Budget Income Statement; Balance Sheet [LO2, L04, LO8, LO9, LO10] The balance shect of Phototec, Inc., a distributor of photographic supplies, as of May 31 is given below: 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 remainder 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 depreciation. 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 interest 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 collections from sales and a schedule of expected cash disbursements for inventory purchases. 2. Prepure a budgeted income statement for June, Use the absorption costing income statement Problem 08-20 1. PHOTOTEC, 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, ending 2. PHOTOTEC, 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 Accounts payable Note payable Capital stock Retained earnings Total liabilities and equity Given Data P08-20: PHOTOTEC, INC. Balance Sheet