Reference no: EM132736165

Following information relates to Acco Co. Beginning cash balance on July 1: $45,000.

1. Cash receipts from sales: 24% is collected in the month of sale, 50% in the next month, and 26% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,548,000; June (actual), $1,080,000; and July (budgeted), $1,260,000.

Payments on merchandise purchases: 48% in the month of purchase and 52% in the month following purchase. Purchases amounts are:

June (actual), $387,000; and July (budgeted), $600,000.
Budgeted cash payments for salaries in July: $189,900.
Budgeted depreciation expense for July: $10,800.
Other cash expenses budgeted for July: $135,000.
Accrued income taxes due in July: $80,000.
Bank loan interest paid in July: $5,940.

Additional Information:

1. Cost of goods sold is 35% of sales.
2. Inventory at the end of June is $72,000 and at the end of July is $231,000.
3. Salaries payable on June 30 are $45,000 and are expected to be $36,000 on July 31.
4. The equipment account balance is $1,440,000 on July 31. On June 30, the accumulated depreciation on equipment is $252,000.
5. The $5,940 cash payment of interest represents the 1% monthly expense on a bank loan of $594,000.
6. Income taxes payable on July 31 are $170,226, and the income tax rate is 35%.
7. The only other balance sheet accounts are Common Stock, with a balance of $643,240 on June 30; and Retained Earnings, with a balance of $964,800 on June 30.

Problem 1: How do you make a budgeted income statement for the month of July and a budgeted balance sheet for July 31? and how do you calculate the budgeted cash receipts and cash payments?