Prepare a budgeted income statement for July. Please present your solution in a good form and income statement in good form.
Transcribed Image Text:Problem 2
The balance sheet of MikeLab, Inc., a distributor of photographic supplies,
as of June 30 is given below:
MikeLab, Inc.
Balance Sheet
June 30
Assets
P8,000
72,000
30,000
Cash
Accounts receivable
Inventory
500,000
Buildings and equipment, net of depreciation
P610,000
Total assets
Liabilities and Equity
P90,000
Accounts payable, suppliers
Note payable
Share capital, no par
Retained earnings
Total liabilities and equity
15,000
420,000
85,000
P610,000
MikeLab, Inc. has not budgeted previously, and for this reason it is limiting
its master budget planning horizon to just one month ahead - namely, July. The
company has assembled the following budgeted data relating to July.
a. Sales are budgeted at P250,000. Of these sales, P60,000 will be for cash;
the remainder will be credit sales. One-half of a month's credit sales are
collected in the month the sales are made, and the remainder is collected
in the month following. All of the June 30 accounts receivable will be
collected in July.
b. Purchases of inventory are expected to total P200,000 during July. These
purchases will all be on account. Forty percent of all inventory purchases
are paid for in the month of purchase; the remainder is paid in the
following month. All of the June 30 accounts payable to suppliers will be
paid during July.
Transcribed Image Text:C. The July 31 inventory balance is budgeted at P40,000.
d. Operating expenses for July are budgeted at P51,000, exclusive of
depreciation. These expenses will be paid in cash. Depreciation is budgeted
at P2,000 for the month.
e. The note payable on the June 30 balance sheet will be paid during July.
The company's interest expense for July (on all borrowing) will be P500,
which will be paid in cash.
I. New warehouse equipment costing P9,000 will be purchased for cash
during July.
g. During July, the company will borrow P18,000 from its bank by giving a
new note payable to the bank for that amount. The new note will be due in
one year.
Definition Definition Basic financial report that forecasts estimated profits, revenue, and expenses for the company in the coming year or months. Budgeted income statements are helpful for companies in planning for the future, making better decisions, and allocating available resources more effectively and efficiently.
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