Problem 2The balance sheet of MikeLab, Inc., a distributor of photographic supplies,as of June 30 is given below:MikeLab, Inc.Balance SheetJune 30AssetsP8,00072,00030,000CashAccounts receivableInventory500,000Buildings and equipment, net of depreciationP610,000Total assetsLiabilities and EquityP90,000Accounts payable, suppliersNote payableShare capital, no parRetained earningsTotal liabilities and equity15,000420,00085,000P610,000MikeLab, Inc. has not budgeted previously, and for this reason it is limitingits master budget planning horizon to just one month ahead - namely, July. Thecompany has assembled the following budgeted data relating to July.a. Sales are budgeted at P250,000. Of these sales, P60,000 will be for cash;the remainder will be credit sales. One-half of a month's credit sales arecollected in the month the sales are made, and the remainder is collectedin the month following. All of the June 30 accounts receivable will becollected in July.b. Purchases of inventory are expected to total P200,000 during July. Thesepurchases will all be on account. Forty percent of all inventory purchasesare paid for in the month of purchase; the remainder is paid in thefollowing month. All of the June 30 accounts payable to suppliers will bepaid during July. c. The July 31 inventory balance is budgeted at P40,000.d. Operating expenses for July are budgeted at P51,000, exclusive ofdepreciation. These expenses will be paid in cash. Depreciation is budgetedat P2,000 for the month.e. The note payable on the June 30 balance sheet will be paid during July.The company's interest expense for July (on all borrowing) will be P500,which will be paid in cash.f. New warehouse equipment costing P9,000 will be purchased for cashduring July.g. During July, the company will borrow P18,000 from its bank by giving anew note payable to the bank for that amount. The new note will be due inone year.Required.1. Prepare a cash budget for July. Support your budget with schedules showingbudgeted cash receipts from sales and budgeted cash payments for inventorypurchases.Please present your solution in good form below.

Name: Problem 2The balance sheet of MikeLab, Inc., a distributor of photogr
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Description: Problem 2The balance sheet of MikeLab, Inc., a distributor of photographic supplies,as of June 30 is given below:MikeLab, Inc.Balance SheetJune 30AssetsP8,00072,00030,000CashAccounts receivableInventory500,000Buildings and equipment, net of deprecia

Cash budget of the business shows all expected cash receipts and cash payments from the business and…

Business

Accounting

C. The July 31 inventory balance is budgeted at P40,000. d. Operating expenses for July are budgeted at P51,000, exclusive oi depreciation. These expenses will be paid in cash. Depreciation is budgeted at P2,000 for the month. e. The note payable on the June 30 balance sheet will be paid during July. The company's interest expense for July (on all borrowing) will be P500, which will be paid in cash. I. New warehouse equipment costing P9,000 will be purchased for cash during July. g. During July, the company will borrow P18,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year. Required. 1. Prepare a cash budget for July. Support your budget with schedules showing budgeted cash receipts from sales and budgeted cash payments for inventory purchases. Please present your solution in good form below.

C. The July 31 inventory balance is budgeted at P40,000. d. Operating expenses for July are budgeted at P51,000, exclusive oi depreciation. These expenses will be paid in cash. Depreciation is budgeted at P2,000 for the month. e. The note payable on the June 30 balance sheet will be paid during July. The company's interest expense for July (on all borrowing) will be P500, which will be paid in cash. I. New warehouse equipment costing P9,000 will be purchased for cash during July. g. During July, the company will borrow P18,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year. Required. 1. Prepare a cash budget for July. Support your budget with schedules showing budgeted cash receipts from sales and budgeted cash payments for inventory purchases. Please present your solution in good form below.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter2: The Accounting Information System

Section: Chapter Questions

Problem 18CE: CORNERSTONE 2.1 Four statements are given below. Pewterschmidt Company values its inventory reported...

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