onth's sales are 20% cash sales and 80% credit sales.  Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale.  All of the accounts receivable at June 30 will be collected in July Each month's ending inventory must equal 20% of the cost of the next month's sales.  The Cost of Goods Sold is 60% of sales.  The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase.  All of the accounts payable at June 30 will be paid in July Monthly selling and administrative expenses are always $75,000.  Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 re

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Valley's managers have made the following additional assumptions and estimates:

  1. Estimated sales for July and August are $345,000 and $315,000 respectively
  2. Each month's sales are 20% cash sales and 80% credit sales.  Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale.  All of the accounts receivable at June 30 will be collected in July
  3. Each month's ending inventory must equal 20% of the cost of the next month's sales.  The Cost of Goods Sold is 60% of sales.  The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase.  All of the accounts payable at June 30 will be paid in July
  4. Monthly selling and administrative expenses are always $75,000.  Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred
  5. The company does not plan to buy or sell any plant and equipment during July.  It will not borrow any money, pay any dividends, issue any common stock or repurchase any of its own common stock during July


Required:

I need help with making a budgeted cash income statement for the month ended July 31

4 Budgeted Income Statement for July 31 (absorption format)
Valley Manufacturing Inc
Budgeted Income Statement
For the Month of July
Sales
Cost of Goods Sold
Gross Margin
Selling and administrative expenses
Net Operating Income
Interest expense
Net Income (Net Loss)
$
$
$
Transcribed Image Text:4 Budgeted Income Statement for July 31 (absorption format) Valley Manufacturing Inc Budgeted Income Statement For the Month of July Sales Cost of Goods Sold Gross Margin Selling and administrative expenses Net Operating Income Interest expense Net Income (Net Loss) $ $ $
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