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# Preparing a budgeted income statement and balance sheet

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Beginning cash balance of July 1 is \$63,000.
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), \$1,700,000: June (actual), \$1,200,000; and July (budgeted), \$1,400,000.
Payments on merchandise purchases: 90% in the month of purchase and 10% in the month following purchase. Purchases amounts are: June (actual), \$620,000;
and July (budgeted), \$790,000.
Budgeted cash disbursements for salaries in July: \$220,000.
Other cash expenses budgeted for July: \$230,000.
Accrued income taxes due in July: \$50,000.
Bank loan interest due in July: \$7,000.

*The ending cash balance = \$143,000.

Using all the information that is noted above:

Then use data below as follows:
a. cost of goods sold is 60% of sales
b. Inventory at the end of June is \$80,000 and at the end of July is \$30,000.
c. Sales payable on June 30 are \$50,000 and are expected to be \$60,000 on July 31.
d. The equipment account balance is \$1,600,000 on July 31. On June 30, the accumulated depreciation on equipment is \$280,000.
e. The \$7,000 cash payment of interest represents the 1% monthly expense on a bank loan of \$700,000.
f. Income taxes payable on July 31 are \$24,600, 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 \$850,000 on June 30; and Retained Earnings, with a balance of \$931,000 on June 30.