Reference no: EM132951125

Following information relates to Acco Co.

Beginning cash balance on July 1: $35,000.
Cash receipts from sales: 27% is collected in the month of sale, 50% in the next month, and 23% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,204,000; June (actual), $840,000; and July (budgeted), $980,000.
Payments on merchandise purchases: 54% in the month of purchase and 46% in the month following purchase. Purchases amounts are: June (actual), $301,000; and July (budgeted), $600,000.
Budgeted cash payments for salaries in July: $147,700.
Budgeted depreciation expense for July: $8,400.
Other cash expenses budgeted for July: $105,000.
Accrued income taxes due in July: $80,000.
Bank loan interest paid in July: $4,620.

Additional Information:

• Cost of goods sold is 40% of sales.
• Inventory at the end of June is $56,000 and at the end of July is $264,000.
• Salaries payable on June 30 are $35,000 and are expected to be $28,000 on July 31.
• The equipment account balance is $1,120,000 on July 31. On June 30, the accumulated depreciation on equipment is $196,000.
• The $4,620 cash payment of interest represents the 1% monthly expense on a bank loan of $462,000.
• Income taxes payable on July 31 are $115,248, and the income tax rate is 35%.
• The only other balance sheet accounts are Common Stock, with a balance of $439,260 on June 30; and Retained Earnings, with a balance of $750,400 on June 30.

Problem 1: Prepare a budgeted income statement for the month of July and a budgeted balance sheet for July 31.