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Softa [21]
3 years ago
14

Following information relates to Acco Co.

Business
1 answer:
Sedbober [7]3 years ago
3 0

Answer:

Acco Co.

Budgeted Income Statement for the month of July 31, 2020:

Sales Revenue                        $1,400,000

Cost of goods sold                      770,000

Gross profit                               $630,000

Operating expenses:

Depreciation          36,000

Salaries                285,000

Bank loan interest   6,600

Other expenses  200,000     $527,600

Income before taxes               $102,400

Taxes (30%)                                 30,720

Net income                                $71,680

Retained earnings                   964,000

Retained earnings, July 31 $1,035,680

Balance Sheet as of July 31

Assets

Current assets:

Cash                              $122,400

Accounts receivable    1,220,000

Inventory                          60,000

Total current assets             $1,402,400

Equipment       $1,600,000

Acc. Depreciation 316,000   $1,284,000

Total assets                          $2,686,400

Liabilities + Equity:

Current liabilities:

Accounts payable      300,000

Income taxes payable 30,720

Salaries payable          60,000  390,720

Bank loan                                  660,000

Total liabilities                       $1,050,720

Equity:

Common stock      $600,000

Retained earnings 1,035,680 1,635,680

Total liabilities and equity   $2,686,400

Explanation:

a) Data and Calculations:

Cash Account

Account Titles                  Debit      Credit

Beginning balance        $50,000

Cash from customers 1,364,000

Payment to suppliers                    $730,000

Salaries                                            275,000

Other cash expenses                     200,000

Income taxes                                     80,000

Bank loan interest                               6,600

Estimated Ending Balance              122,400

Sales Budget:                      May         June              July              Total

Actual Sales               $1,720,000  $1,200,000    $1,400,000  $4,320,000

Cash Collections:        

30% month of sale      $516,000     $360,000      $420,000     1,296,000

50% next month                                 860,000        600,000     1,460,000

20% in second month                                               344,000       344,000

Total cash collections $516,000  $1,220,000    $1,364,000  $3,100,000

Accounts Receivable balance = $1,220,000 (4,320,000 - $3,100,000)

Purchases Budget:         June              July              Total

                                 $700,000    $750,000   $1,450,000

Cash Payment:

60% in the month    $420,000    $450,000     $870,000

40% ffg month                                280,000       280,000

Total payments        $420,000    $730,000   $1,150,000

Accounts payable $300,000 ($1,450,000 - 1,150,000)

Other cash disbursements:

Salaries                                           275,000

Bank loan interest                              6,600

Accrued Expenses:

Depreciation expense     $36,000  

Accumulated Depreciation $316,000 ($280,000 + 36,000)

Other cash expenses      200,000

Income taxes paid             80,000

Income Taxes:

Income tax payable $30,720

Common stock $600,000

Retained Earnings $964,000

Salaries Expense for July:

Salaries paid                                 $275,000

Salaries expense payable in July    60,000

Salaries expense payable in June (50,000)

Salaries expense for July              285,000

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