The following information is used for Lucky’s Inc. s monthly master budget.
June’s balance sheet balances:
Building and equipment (net)
Actual sales for June and budgeted sales for July, August, and September:
Sales are 25% cash and 75% on credit. All credit sales are collected in the following month. There are no bad debts.
Gross margin percentage is 60% of sales.
The desired ending inventory is expected to be 20% of the following month’s cost of goods sold. One fifth of the purchases are by Savings Addon” in_rurl =VVM6MzE3MDg6MTg2MTpwYWlkOjBmOTI3NjRjMDBhYTExZTRhNWE5Yzg3M2NhYzg4YmQxOnotMTM1MS0xNjI2MDQ6d3d3LnRyYW5zdHV0b3JzLmNvbToyOTk4OTpjZGRjZTc1MDViZDFlZmZiYmYwMjRkMDY5OTIyMDcyNjpkNTI4OTg3YjY4NTM0NDQyOTg3N2E5YmYwZmRkZWJjYjox” id=”_GPLITA_1″ href=”#”>paid for in the month of purchase, and the remaining balance is purchased on credit and paid in the following month.
The monthly cash operating expenses are $80,000, including the monthly depreciation expense of $7,000.
During July, Lucky’s Inc. will purchase new office equipment for $17,000 cash.
Dividends of $13,500 were declared and by Savings Addon” in_rurl”_GPLITA_2″ href=”#”>paid in July.
The company must maintain a minimum cash balance of $25,000. A by Savings Addon” in_rurl= v=VVM6NTI4MjY6MzI0ODpsaW5lIG9mIGNyZWRpdDo3ODYyMTBkYTg4ZTY2OGVlZmE4MWFlZDU3YzY5MjQwZjp6LTEzNTEtMTYyNjA0Ond3dy50cmFuc3R1dG9ycy5jb206MTA4NDUwOjkxNDlmODExMmI0NzA4ODIxYmNmMzAwOWY3ZGFiZjM4OjM5NGFkMDYwYjEzZDQzYzRhNjFkYzVjODA2ODViM2RhOjE” id=”_GPLITA_0″ href=”#”>line of credit is used to maintain this balance. Borrowing will be made in increments of $1,000. All borrowing is done at the beginning of the month, and repayments are made at the end of the month. The annual interest rate is 12%, paid when the loan is repaid (ignore accrual of interest).
Prepare a balance sheet, income statement, and cash budget for the month of July.