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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.

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