The following information relates to Acco Co.: a. Beginning cash balance on July
ID: 2429622 • Letter: T
Question
The following information relates to Acco Co.:
a. Beginning cash balance on July 1: $35,000.
b. Cash receipts from sales: 27% is collected in the month of sale, 50% in the next month, and 23% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,204,000; June (actual), $840,000; and July (budgeted), $980,000.
c. Payments on merchandise purchases: 54% in the month of purchase and 46% in the month following purchase. Purchases amounts are: June (actual), $301,000; and July (budgeted), $600,000.
d. Budgeted cash payments for salaries in July: $147,700.
e. Budgeted depreciation expense for July: $8,400.
f. Other cash expenses budgeted for July: $105,000.
g. Accrued income taxes due in July: $80,000.
h. Bank loan interest paid in July: $4,620.
Additional Information:
i. Cost of goods sold is 40% of sales.
j. Inventory at the end of June is $56,000 and at the end of July is $264,000.
k. Salaries payable on June 30 are $35,000 and are expected to be $28,000 on July 31.
l. The equipment account balance is $1,120,000 on July 31. On June 30, the accumulated depreciation on equipment is $196,000.
m. The $4,620 cash payment of interest represents the 1% monthly expense on a bank loan of $462,000.
n. Income taxes payable on July 31 are $98,784, and the income tax rate is 30%.
o. The only other balance sheet accounts are: Common Stock, with a balance of $439,260 on June 30; and Retained Earnings, with a balance of $750,400 on June 30.
Prepare a budgeted income statement for the month of July and a budgeted balance sheet for July 31.
Calculation of Cash Receipts From Sales Collected in July 31 Total Sales May June July Accounts Rec. Credit sales from May June July Totals $ 1,204,000$ 325,080$ 602,000 276,920$ 193,200 715,400 $3,024,000 $325,080$ 828,800$961,520$ 908,600 840,000 0 226,800 420,000 980,000 0 0 264,600 Calculation of Cash Payments for Merchandise Paid in July 31 Total Purchases June July Accounts Pay Purchases from June July Totals 301,000$162,540$ 138,460 $ 600,000 901,000$162,540 $462,460 $276,000 0 324,000 276,000Explanation / Answer
Calculation of Cash Receipts From Sales ------------------Collected in------------------- July 31 Total Sales May June July Accounts Rec. Credit sales from: May $1,204,000 $325,080 $602,000 $276,920 $0 June 840,000 $226,800 $420,000 $193,200 July 980,000 $264,600 $715,400 Totals 3024000 325080 828800 $ 961,520 908600 2 Calculation of Cash Payments for Merchandise ------------------Paid in------------------- July 31 Total Purchases June July Accounts Pay. Purchases from: June $301,000 $162,540 $138,460 $0 July 600,000 324,000 276,000 Totals $901,000 $162,540 $462,460 $276,000 ACCO COMPANY Budgeted Income Statement For Month Ended July 31 Sales $980,000 Cost of goods sold 40%*980000 392,000 Gross profit 588,000 Operating expenses Salaries expense (28000-35000 =-7000) 140,700 Depreciation expense 8,400 Other cash expenses 105,000 Bank loan interest expense 4,620 Total operating expenses 258720 Income before taxes 329,280 Income tax expense 98,784 Net income 230,496 ACCO COMPANY Cash Budget For the Month Ended July 31 Beginning cash balance $35,000 Cash receipts from sales 961,520 Total cash available $996,520 Cash disbursements: Payments for merchandise 462,460 Salaries 147,700 Other expenses 105,000 Accrued taxes 80,000 Interest on bank loan 4,620 Total cash disbursements 799,780 Ending cash balance $196,740 3 ACCO COMPANY Budgeted Balance Sheet As of July 31 Assets Cash $196,740 Accounts receivable 908,600 Inventory 264,000 Total current assets $1,369,340 Equipment 1,120,000 Accumulated depreciation 204,400 Equipment, net 915,600 Total assets $2,284,940 Liabilities and Equity Liabilities Accounts payable 276,000 Salaries payable 28,000 Income taxes payable 98,784 Total current liabilities 402,784 Bank loan payable 462000 Total liabilities 864,784 Stockholders' Equity Common stock 439,260 Retained earnings 750400+230496 980,896 Total Stockholders' equity 1,420,156 Total Liabilities and Equity 2,284,940
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.