Purchase Solution

Preparing a budgeted income statement and balance sheet

Not what you're looking for?

Ask Custom Question

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.

Purchase this Solution

Purchase this Solution


Free BrainMass Quizzes
Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.