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Financial & Managerial Accounting
Found in: Page 921
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Use the information in Exercise 20-25 and the following additional information to prepare a budgeted income statement for the month of July and a budgeted balance sheet for July 31.

a. Cost of goods sold is 55% of sales.

b. Inventory at the end of June is $80,000 and at the end of July is $60,000.

c. Salaries payable on June 30 are $50,000 and are expected to be $60,000 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 bank loan of $660,000.

f. Income taxes payable on July 31 are $30,720, and the income tax rate 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 $964,000 on June 30.

The budgeted income statement and the budgeted balance sheet for Acco Company will be made after adjusting the balances of additional information.

See the step by step solution

Step by Step Solution

Budgeted income statement

Acco Company

Budgeted income statement

For the month of July





Cost of goods sold


Gross profit


Operating expenses:





Other cash expenses


Bank loan interest


Total operating expenses


Income before income taxes


Income tax expense


Net Income


Budgeted balance sheet

Acco Company

Budgeted balance sheet

For the month of July





Accounts receivables




Total current assets




Accumulated depreciation


Net equipment


Total assets


Liabilities and Equity



Accounts payable


Salaries payable


Income taxes payable


Total current liabilities


Bank loan payable


Total liabilities


Stockholder’s Equity

Common stock


Retained earnings


Total stockholder’s equity


Total liabilities and equity


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