Balance Sheet as of June 30:
Cash - $8,000
Accounts Receivable - $20,000
Inventory - $36,000
Plant and Equipment Net - $120,000
Accounts Payable - $21,750
Capital Stock - $150,000
Retained Earnings - $12,250
a) Gross profit is 25% of sales.
b) Actual and budgeted sales data:
March (actual) - $50,000
April - $60,000
May - $72,000
June - $90,000
July - $43,000
c) Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following the sale. The accounts receivable at March 31 are a result of March credit sales.
d) At the end of each month, inventory is to be on hand equal to 80% of the following month's sales needed, stated at cost. One half of a month's inventory purchases is paid for in the following month. The accounts payable at March 31 are a result of March purchases of inventory.
e) Monthly expenses are as follows: salaries and wages, 12% of sales; rent, $2,500 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $900 per month (includes depreciation on new assets).
f) Equipment costing $1,500 will be purchased for cash in April.
g) The company must maintain a minimum balance of $4,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of the month, and all repayments are made at the end of a month; borrowing must be in multiples of $1,000. The annual interest rate is 12%. Interest is paid only at the time of repayment of principal.
Required: Using the data above, prepare a Balance Sheet as of June 30.
