The balance sheet of Phototec, Inc., a distributor of photographic supplies, as of May 31 is given below:

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 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:
1a.	Prepare schedule of expected cash collections from sales and a schedule of expected cash disbursements for inventory purchases. (Omit the "$" sign in your response.)

    

Schedule of Expected Cash Collections
Cash sales-June	$ 60,000
Collections on accounts receivable:
May 31 balance	72,000
June	95,000
Total cash receipts	$ 227,000

  

Schedule of Expected Cash Disbursements
May 31 accounts payable balance	$ 90,000
June purchases	80,000
Total cash payments	$ 170,000

   

1b.	Prepare a cash budget for June. (Input all amounts as positive values except cash deficiency, repayments and interest which should be indicated by a minus sign. Omit the "$" sign in your response.)

   

Phototec, Inc. Cash Budget For the Month of June
Cash balance, beginning	$ 8,000
Add receipts from customers	227,000
Total cash available	235,000
Less disbursements:
Purchase of inventory	170,000
Selling and administrative expenses	51,000
Purchases of equipment	9,000
Total cash disbursements	230,000
Excess of receipts over disbursements	5,000
Financing:
Borrowings-note	18,000
Repayments-note	-15,000
Interest	-500
Total financing	2,500
Cash balance, ending	$ 7,500

   

2.	Prepare a budgeted income statement for June. (Input all amounts as positive values. Omit the "$" sign in your response.)

Phototec, Inc. Budgeted Income Statement For the Month of June
Sales		$ 250,000
Cost of goods sold:
Beginning inventory	$ 30,000
Purchases	200,000
Goods available for sale	230,000
Ending inventory	40,000
Cost of goods sold		190,000
Gross margin		60,000
Selling and administrative expenses		53,000
Net operating income (loss)		7,000
Interest expense		500
Net income (loss)		$ 6,500

   

3.	Prepare a budgeted balance sheet as of June 30. (Be sure to list the assets and liabilities in order of their liquidity. Omit the "$" sign in your response.)

Phototec, Inc. Budgeted Balance Sheet June 30
Assets
Cash	$ 7,500
Accounts receivable	95,000
Inventory	40,000
Buildings and equipment, net of depreciation	507,000
Total assets	$ 649,500
Liabilities and Stockholders' Equity
Accounts payable	$ 120,000
Note payable	18,000
Capital stock	420,000
Retained earnings	91,500
Total liabilities and equity	$ 649,500