Exercise 20-4 Merchandising: Preparing a budgeted income statement and balance s

Exercise 20-4 Merchandising: Preparing a budgeted income statement and balance sheet LO P2Following information relates to Acco Co.Cash receipts from sales: 30% is collected in the month of sale 50% in the next month and 20% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual) $1204000; June (actual) $840000; and July (budgeted) $980000.Payments on merchandise purchases: 60% in the month of purchase and 40% in the month following purchase. Purchases amounts are: June (actual) $301000; and July (budgeted) $600000.The equipment account balance is $1120000 on July 31. On June 30 the accumulated depreciation on equipment is $196000.The $4620 cash payment of interest represents the 1% monthly expense on a bank loan of $462000.Income taxes payable on July 31 are $101528 and the income tax rate applicable to the company is 35%.The only other balance sheet accounts are: Common Stock with a balance of $396000 on June 30; and Retained Earnings with a balance of $750400 on June 30.Prepare a budgeted income statement for the month of July and a budgeted balance sheet for July 31