Valley Manufacturing Inc Balance Sheet June 30, 2021 Assets Cash 140,000 Accounts receivable 175,000 Inventory S 45,200 Plant and equipment, net of depreciation 5 554,800 Total Assets 915,000 Liabilities and Stockholders' Equity Accounts payable 115,000 Common stock 586,000 Retained earnings $ 214,000 Total Liabilities and Stockholders' Equity S 915,000Valley's managers have made the following additional assumptions and estimates: 1 Estimated sales for July and August are $345,000 and $315,000 respectively 2 Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and ?0% in the month following the sale. All of the accounts receivable atJune 30 will be collected in July 3 Each momth's ending inventory must equal 20% ofthe cost of the next month's sales. The Cost of Goods Sold is 00% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable atJune 30 will be paid in July 4 Monthly selling and administrative expenses are always $36,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred 5 The company does not plan to buy or sell any plant and equipment during July. It will not borrow any money, pay any dividends, issue any common stock or repurchase any of its own common stock during July 1 Calculate the expected total cash collections for July 326800 69000 cash sales for July + 82800 credit sales for July + 175000 June A/R= 326800 2 Calculate the expected cash disbursements for merchandise purchases for July 130120 COGS August = 315000*60%= 189000 --> July ending inventory must equal 20% of 189000 or $37800. 40% paid in July = 15120 + A/P June 15000 = 130120Valley Manufacturing Inc Cash Budget For the Month of July Beginning cash balance 140,000 Add: collections from customers S 326,800 Total cash available 466,800 Less: cash disbursements: 8:88888 Purchase of inventory S 130,120 Selling and administrative expenses 75,000 Total cash disbursements 205,120 Excess of cash available over disbursements $ 261,680 Financing: Borrowing Repayments Interest Total financing Ending cash balance 261,680Budgeted Income Statement for July 31 (absorption format ) Valley Manufacturing Inc Budgeted Income Statement For the Month of July Sales Cost of Goods Sold Gross Margin S Selling and administrative expenses Net Operating Income S Interest expense Net Income (Net Loss)Calculate estimated Accounts receivable turnover for July (round to 3 decimal places ) Calculate estimated Inventory turnover for July (round to 3 decimal places ) Calculate estimated Operating Cycle for July- use 30 days in numerator to calculate the average collection period and average sales period (round to 3 decimal places) Net cash provided by operating activities for July (indirect method) Net income Adjustments to cconvert net income to a cash basis: Depreciation Accounts receivable Inventory Accounts payable Sub total of adjustments Net cash provided by operating activities