Valley Manufacturing Inc Balance Sheet June 30, 2021 Assets Cash 5 140,000 Accounts receivable $ 175,000 Inventory 3 45,200 Plant and equipment, net of depreciation $ 554,800 Total Assets S 915,000 Liabilities and Stockholders' Equity Accounts payable 5 115,000 Common stock $ 586,000 Retained earnings 3 214,000 Total Liabilities and Stockholders' Equity $ 915,000 Valley's managers have made the following additional assumptions and estimates: Estimated sales for July and August are $345,000 and $315,000 respectively 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 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July Each momth's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% 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 at June 30 will be paid in July Monthly selling and administrative expenses are always $75,000. 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 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 \fRequirements for Valley Manufacturing Answer Boxes 1 Calculate the expected total cash collections for July - 2 Calculate the expected cash disbursements for merchandise purchases forJuly - 3 Cash Budget for July (yellow boxes have formulas built it) Valley Manufacturing Inc Cash Budget For the Month of July Beginning cash balance Add: collections from customers Total cash available Less: cash disbursements: Purchase of inventory Selling and administrative expenses Total cash disbursements Excess of cash available over disbursements Financing: Borrowing Repayments Interest Total financing Ending cash balance 4 Budgeted 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)5 Balance Statement Valley Manufacturing Inc Budgeted Balance Statement July 31, 2021 Assets Cash Accounts receivable Inventory Plant and equipment, net of depreciation Total Assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total Liabilities and Stockholders' Equity 6a Calculate estimated Accounts receivable turnover for July (round to 3 decimal places ) - 6b Calculate estimated Inventory turnover forJuly (round to 3 decimolploces) - 7 Calculate estimated Operating Cycle forJuly- use 30 days in numerator to calculate the average collection period and average sales period (round to 3 decimal places) 8 Net cash provided by operating activities forJuly (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