The balance sheet of Phototec, Inc., a distributor of photographic supplies, as
ID: 2374983 • Letter: T
Question
The balance sheet of Phototec, Inc., a distributor of photographic supplies, as of May 31 is given below:
567,800
680,000
81,600
680,000
Sales are budgeted at $265,000 for June. Of these sales, $70,000 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 the following month. All of the May 31 accounts receivable will be collected in June.
Purchases of inventory are expected to total $196,000 during June. These purchases will all be on account. Sixty percent of all inventory purchases are paid for in the month of purchase; the remainder are paid in the following month. All of the May 31 accounts payable to suppliers will be paid during June.
Selling and administrative expenses for June are budgeted at $30,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month.
The note payable on the May 31 balance sheet will be paid during June. The company’s interest expense for June (on all borrowing) will be $800, which will be paid in cash.
During June, the company will borrow $24,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.
Prepare schedule of expected cash collections from sales and a schedule of expected cash disbursements for inventory purchases. (Omit the "$" sign in your response.)
Prepare a cash budget for June. (Input all amounts as positive values except cash deficiency, repayments and interest which should be indicated by a minus sign. Omit the "$" sign in your response.)
Prepare a budgeted balance sheet as of June 30. (Be sure to list the assets and liabilities in order of their liquidity. Omit the "$" sign in your response.)
Phototec, Inc.Balance Sheet
May 31 Assets Cash $ 10,200 Accounts receivable 68,000 Inventory 34,000 Buildings and equipment, net of depreciation
567,800
Total assets $680,000
Liabilities and Stockholders' Equity Accounts payable $ 81,600 Note payable 14,960 Capital stock 501,840 Retained earnings81,600
Total liabilities and stockholders' equity $680,000
Explanation / Answer
1a. Schedule of Expected Cash Collections Cash sales-June $70,000 Collections on accounts receivable: May 31 balance 68,000 June 97,500 Total cash receipts $235,500 Schedule of Expected Cash Disbursements May 31 accounts payable balance $ 81,600 June purchases 127,600 Total cash payments $ 209,200 1b. Phototec, Inc. Cash Budget For the Month of June Cash balance, beginning $10,200 Add receipts from customers 235,500 Total cash available 245,700 Less disbursements: Purchase of inventory 117,600 Selling and administrative expenses 30,000 Purchases of equipment 10,000 Total cash disbursements 157,600 Excess of receipts over disbursements 88,100 Financing: Borrowings-note 24,000 Repayments-note 14,960 Interest 800 Total financing 39,760 Cash balance, ending $48,340
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