Following information relates to Acco Co.
a. | Beginning cash balance on July 1: $40,000. |
b. |
Cash
receipts from sales: 30% is collected in the month of sale, 50% in the
next month, and 20% in the second month after sale (uncollectible
accounts are negligible and can be ignored). Sales amounts are: May
(actual), $1,376,000; June (actual), $960,000; and July (budgeted),
$1,120,000.
|
c. |
Payments
on merchandise purchases: 60% in the month of purchase and 40% in the
month following purchase. Purchases amounts are: June (actual),
$344,000; and July (budgeted), $600,000.
|
d. | Budgeted cash disbursements for salaries in July: $168,800. |
e. | Budgeted depreciation expense for July: $9,600. |
f. | Other cash expenses budgeted for July: $120,000. |
g. | Accrued income taxes due in July: $80,000 (related to June). |
h. | Bank loan interest paid July 31: $5,280. |
Additional Information: |
a. | Cost of goods sold is 44% of sales. |
b. | Inventory at the end of June is $64,000 and at the end of July is $171,200. |
c. | Salaries payable on June 30 are $40,000 and are expected to be $32,000 on July 31. |
d. |
The equipment account balance is $1,280,000 on July 31. On June 30, the accumulated depreciation on equipment is $224,000.
|
e. |
The $5,280 cash payment of interest represents the 1% monthly expense on a bank loan of $528,000.
|
f. |
Income taxes payable on July 31 are $99,456, and the income tax rate applicable to the company is 30%.
|
g. |
The
only other balance sheet accounts are: Common Stock, with a balance of
$464,000 on June 30; and Retained Earnings, with a balance of $857,600
on June 30.
|
Prepare a budgeted income statement for the month of July and a budgeted balance sheet for July 31.
Explanation:
Budgeted Income Statement supporting calculations |
| | | |
Sales | $ | 1,120,000 | |
Cost percent | | 44 | % |
|
|
|
|
Cost of goods sold | $ | 492,800 | |
|
|
|
|
|
| | |
Cash paid | $ | 168,800 |
Less beginning payable | | (40,000) |
Plus ending payable | | 32,000 |
|
|
|
Salaries expense | $ | 160,800 |
|
|
|
|
| | | |
Pre-tax income | $ | 331,520 | |
Tax rate | | 30 | % |
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Income tax expense | $ | 99,456 | |
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Budgeted Balance Sheet supporting calculations |
Cash receipts in July from sales |
| | |
From May sales ($1,376,000 × 20%) | $ | 275,200 |
From June sales ($960,000 × 50%) | | 480,000 |
From July sales ($1,120,000 × 30%) | | 336,000 |
|
|
|
Total | $ | 1,091,200 |
|
|
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|
Cash disbursements in July for merchandise |
| | |
For June purchases ($344,000 × 40%) | $ | 137,600 |
For July purchases ($600,000 × 60%) | | 360,000 |
|
|
|
Total | $ | 497,600 |
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| | |
June sales (20% × $960,000) | $ | 192,000 |
July sales (70% × $1,120,000) | | 784,000 |
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|
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Total | $ | 976,000 |
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|
| | |
Beginning | $ | 224,000 |
Depreciation expense(July) | | 9,600 |
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Ending | $ | 233,600 |
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| | | |
Purchases | $ | 600,000 | |
Percent unpaid | | 40 | % |
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Payable | $ | 240,000 | |
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|
| | |
Beginning | $ | 857,600 |
Net income | | 232,064 |
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Ending | $ | 1,089,664 |
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