Use the Following Information to Prepare a Budgeted Income Statement

question 28

Essay

Use the following information to prepare a budgeted income statement for Stellar Company for the month of June.
a.Beginning cash balance on June 1 is $52,000.
b.Sales amounts are: April (actual),$1,450,000,May (actual),$1,600,000,and June (budgeted),$1,700,000.
c.Cost of goods sold is 53% of sales.
d.Budgeted cash payments for salaries in June: $260,000.Salaries payable on May 31 are $60,000 and are expected to be $50,000 on June 30.
e.Budgeted depreciation expense for June: $24,000.
f.Other cash expenses budgeted for June: $282,000.
g.Accrued income taxes due in June: $48,000.
h.Bank loan interest due in June: $8,000 which represents the 1% monthly expense on a bank loan of $800,000.
i.The income tax rate applicable to the company is 30%.

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Definitions:

Long-Run Phillips Curve

Represents the relationship between inflation and unemployment when the economy is at its natural rate of unemployment, typically showing no trade-off between inflation and unemployment in the long run.

Short-Run Phillips Curve

An economic model illustrating a temporary inverse relationship between the rate of unemployment and the rate of inflation, providing insights into monetary policy's impact.

Volcker Disinflation

A policy period in the early 1980s during which Federal Reserve Chairman Paul Volcker significantly raised interest rates to reduce inflation.

Money Growth

The increase in the amount of money in circulation within an economy, which can influence inflation and economic activity.