wheeling Company merchandise tnst provided 5 b5ance neet of

wheeling Company merchandise? tnst provided 5 b5ance ,neet of September 30shown below. Wheeling Company Bslance Sheet S 62600 06,000 nventor Butldinga and equipment, net of deprec stian Totsl assets 235,000 446,800 isbilities and Stockholders\' Equlty Accounts psysble Common stack Reta ned earning Totsl lisbilites and stockholdera equity S 121,800 216,000 The company ls In the process of preparing s budget for October and has sssembled the fol lawing dsts t Soes ner busgetea 5:5320.000 for October 5na S330.000 for Novembec Of tnese so es. 35% will b for cean; the remainder wil credit s. es Fo ty percent of month\'s credt ssies 5 e collecteo tne month thesa es ser ace·and tne remaining 60% ce collected in the fallowlng month. All of the Seatember 30 accounts rece able will be col ected In October 2 Te budgeted cost of gooossold ys 45% of g5les 5na the ending mercnandise trmentory |& ys 30% of the following month\'s cost of goodssold 3. Al merchandse purcnses 5re on eccount Thirty percent of all purchases 5re P5lo for In the montn of purcnse end 70% ne pid for In the following montih. All af the September 30 sccounta payeble to supplers will be pd during October 4 Seling eno omínlatrette excenses for Octocer ne budgetea$94,200, exclusive of ceprecetion. These expenses will ce peld n cash. Depreclation ls budgeted at $2,350 for the month. Required: 1. Uaing the nformation provided, calcuiste or prepsre the folawing . The budgeted cash collections for October c. The budgeted cssh disbursements for merchandise purchsses for October d. The budgeted net operating Income for October e. A budgeted balance sheet st October 3 2 Assume the following changes to the underying budgeting ssumptions (1) 50% of 5 month\'s credt ”les 5e colected In tne month the asies are m5ce 5nd the remaining 50% colectea 1n the following month. (2) the ending mercnanalae Inventory ways 10% of the following month\'s cost of gooossold, and (3) 20% of all purchses ne Paid for in the month of purcheaand 80% se paio for in the following month, using thesnew ssumotions, calculst or prepar the folowlng a The budgeted cesh collectians for October . The budgeted merchandise purchsses for October c. The budgeted cssh disbursements for merchandise purchsses for October d. Net opersting Income for the month of October. e. A budgeted balance sheet st October 31 Complete this question by antaring your aniwers in the tabs balow. Prepare a budoeted balance sheet at October 31 Balanoe sheet Total assats Liabil ec and Btookholderd Equty a lables and stockholders, aity

Solution

Revised 2C, 2D and 2E are given below.

1.
a. Budgeted cash collection for October
Details	October
September sales	106000
October sales	112000
(35% of $320,000)
Total Cash collections	218000
b. Budgeted purchase of October
Details	October
Budgeted sales	320000
Cost of goods sold(45% of sales)	144000
Add: Ending Inventory	44550
(30% of next months cost )
Desired inventory	188550
Less: Beginning inventory	43200
Budgeted purchases	145350
c. Budgeted cash disbursement for purchases
Details	October
September purchases	121800
October purchases	43605
(30% of $145,350)
Cash disbursement for purchases	165405
d. Budgeted net operating income
Sales		320000
Cost of goods sold		144000
Gross profit		176000
Selling and administrative exp.
Selling and administrative exp.	94200
Depreciation	2350	96550
Net operating income   *		79450
e. Budgeted Balance Sheet
Assets
Cash    **		20995
Accounts Receivables		208000
Inventory		44550
Building and equipment, net		232650
Total Assets		506195
Liabilities and equity
Accounts Payable		101745
Common stock		216000
Retained earnings
Beginning Balance	109000
Net Income for the month   *	79450	188450
Total liabilities and equity		506195
Cash Budget
Beginning Balance	62600
Collection from Sales	218000
Cash available for disbursements	280600
Cash disbursements:
For purchases	165405
For selling and administrative exp.	94200
Total cash disbursements	259605
Ending Balance **	20995