The following information is used for Lucky’s Inc.”?s monthly master budget.

| September 29, 2018

The following information is used for Lucky’s Inc. s monthly master budget.June’s balance sheet balances:Cash$10,500Accounts payable$53,760Accounts receivable$80,000Capital stock$260,000Inventory$26,000Retained earnings$2,740Building and equipment (net)$200,000Actual sales for June and budgeted sales for July, August, and September:June (actual)$140,000July (budget)$320,000August (budget)$180,000September (budget)$200,000Sales are 25% cash and 75% on credit. All credit sales are collected in the following month. There are no bad debts.Gross margin percentage is 60% of sales.The desired ending inventory is expected to be 20% of the following month’s cost of goods sold. One fifth of the purchases are by Savings Addon” in_rurl=”” id=”_GPLITA_1″ href=”#”>×10.png”> for in the month of purchase, and the remaining balance is purchased on credit and paid in the following month.The monthly cash operating expenses are $80,000, including the monthly depreciation expense of $7,000.During July, Lucky’s Inc. will purchase new office equipment for $17,000 cash.Dividends of $13,500 were declared and by Savings Addon” in_rurl=”” id=”_GPLITA_2″ href=”#”>×10.png”> in July.The company must maintain a minimum cash balance of $25,000. A by Savings Addon” in_rurl=”” id=”_GPLITA_0″ href=”#”>line of×10.png”> is used to maintain this balance. Borrowing will be made in increments of $1,000. All borrowing is done at the beginning of the month, and repayments are made at the end of the month. The annual interest rate is 12%, paid when the loan is repaid (ignore accrual of interest).Required:Prepare a balance sheet, income statement, and cash budget for the month of July.

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