Wheeling Company is a merchandiser that provided a balance sheet as of September 30 as shown...

Transcribed Image Text:

Wheeling Company is a merchandiser that provided a balance sheet as of September 30 as shown below: Wheeling Company Balance Sheet September 30 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Common stock Accounts payable Retained earnings Total liabilities and stockholders' equity $ 61,000 170,000 86,400 249,000 $ 566,400 $ 217,900 216,000 132,500 $ 566,400 The company is in the process of preparing a budget for October and assembled the following data: 1. Sales are budgeted at $640,000 for October and $650,000 for November. Of these sales, 35% will be for cash; the remainder will be credit sales. Forty percent of a month's credit sales are collected in the month the sales are made, and the remaining 60% are collected in the following month. All of the September 30 accounts receivable will be collected in October. 2. The budgeted cost of goods sold is always 45% of sales and the ending merchandise inventory is always 30% of the following month's cost of goods sold. 3. All merchandise purchases are on account. Thirty percent of all purchases are paid for in the month of purchase and 70% are paid for in the following month. All of the September 30 accounts payable to suppliers will be paid during October. 4. Selling and administrative expenses for October are budgeted at $96,600, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,490 for the month. Required: 1. Using the information provided, calculate or prepare the following for October: a. The budgeted cash collections. b. The budgeted merchandise purchases. c. The budgeted cash disbursements for merchandise purchases. d. The budgeted net operating income. e. An-end-of-month budgeted balance sheet. 2. Assume the following changes to the underlying budgeting assumptions: 1. 50% of a month's credit sales are collected in the month the sales are made and the remaining 50% are collected in the following month 2. The ending merchandise inventory is always 10% of the following month's cost of goods sold 3. 20% of all purchases are paid for in the month of purchase and 80% are paid for in the following month. Using these new assumptions, calculate or prepare the following for October: a. The budgeted cash collections. b. The budgeted merchandise purchases. c. The budgeted cash disbursements for merchandise purchases. d. Net operating income. e. An end-of-month budgeted balance sheet. Wheeling Company is a merchandiser that provided a balance sheet as of September 30 as shown below: Wheeling Company Balance Sheet September 30 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Common stock Accounts payable Retained earnings Total liabilities and stockholders' equity $ 61,000 170,000 86,400 249,000 $ 566,400 $ 217,900 216,000 132,500 $ 566,400 The company is in the process of preparing a budget for October and assembled the following data: 1. Sales are budgeted at $640,000 for October and $650,000 for November. Of these sales, 35% will be for cash; the remainder will be credit sales. Forty percent of a month's credit sales are collected in the month the sales are made, and the remaining 60% are collected in the following month. All of the September 30 accounts receivable will be collected in October. 2. The budgeted cost of goods sold is always 45% of sales and the ending merchandise inventory is always 30% of the following month's cost of goods sold. 3. All merchandise purchases are on account. Thirty percent of all purchases are paid for in the month of purchase and 70% are paid for in the following month. All of the September 30 accounts payable to suppliers will be paid during October. 4. Selling and administrative expenses for October are budgeted at $96,600, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,490 for the month. Required: 1. Using the information provided, calculate or prepare the following for October: a. The budgeted cash collections. b. The budgeted merchandise purchases. c. The budgeted cash disbursements for merchandise purchases. d. The budgeted net operating income. e. An-end-of-month budgeted balance sheet. 2. Assume the following changes to the underlying budgeting assumptions: 1. 50% of a month's credit sales are collected in the month the sales are made and the remaining 50% are collected in the following month 2. The ending merchandise inventory is always 10% of the following month's cost of goods sold 3. 20% of all purchases are paid for in the month of purchase and 80% are paid for in the following month. Using these new assumptions, calculate or prepare the following for October: a. The budgeted cash collections. b. The budgeted merchandise purchases. c. The budgeted cash disbursements for merchandise purchases. d. Net operating income. e. An end-of-month budgeted balance sheet.