Reference no: EM131588428

Following information relates to Acco Co.

a. Beginning cash balance on July 1: $50,000.

b. Cash receipts from sales: 21% is collected in the month of sale, 50% in the next month, and 29% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,720,000; June (actual), $1,200,000; and July (budgeted), $1,400,000.

c. Payments on merchandise purchases: 42% in the month of purchase and 58% in the month following purchase. Purchases amounts are: June (actual), $430,000; and July (budgeted), $600,000.

d. Budgeted cash disbursements for salaries in July: $211,000.

e. Budgeted depreciation expense for July: $12,000.

f. Other cash expenses budgeted for July: $150,000.

g. Accrued income taxes due in July: $80,000 (related to June).

h. Bank loan interest paid July 31: $6,600. 

Additional Information:

a. Cost of goods sold is 31% of sales.

b. Inventory at the end of June is $80,000 and at the end of July is $246,000.

c. Salaries payable on June 30 are $50,000 and are expected to be $40,000 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 $6,600 cash payment of interest represents the 1% monthly expense on a bank loan of $660,000.

f. Income taxes payable on July 31 are $208,740, and the income tax rate applicable to the company is 35%.

g. The only other balance sheet accounts are: Common Stock, with a balance of $785,400 on June 30; and Retained Earnings, with a balance of $1,072,000 on June 30.

Prepare a budgeted income statement for the month of July and a budgeted balance sheet for July 31.