a. Beginning cash balance on July 1: $50,000.
b. 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), $1,720,000; June (actual), $1,200,000; and July (budgeted), $1,400,000.
c. Payments on merchandise purchases: 60% in the month of purchase and 40% 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 due in July: $6,600.
Additional Information:
a. Cost of goods sold is 44% of sales.
b. Inventory at the end of June is $80,000 and at the end of July is $64,000.
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 long-term bank loan of $660,000.
f. Income taxes payable on July 31 are $124,320, 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 $600,000 on June 30; and Retained Earnings, with a balance of $1,072,000 on June 30.