wneeling Company 5 merchandise thst pro ced 5 bsence neet of

wneeling Company 5 merchandise? thst pro ced 5 bsence ,neet of September 30snown oe ow: Wheeling Company Bslance Sheet Assets S 62600 nventor Butldinga and equipment, net of deprec stian Totsl assets 235,000 isbilities and Stockholders\' Equlty Accounts psysble Common stack Retained esrning Totsl lsbilites and stockholder 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 and S330.000 for Novem ec Of tnese so es. 3596 will ce for cesn; the remainder wil ce credit sees. Forty percent of. month\'s credit gsies 5re collecteo nthe month the ;o es re mace·and tne remiing 6056 collected in the fallowlng month. All of the Seatember 30 accounts rece able will be col ected In October 2 Te budgeted cost of goods sold·eweys 45% of ”les ano the ending mercnandise tnventory t; INeys 30% of the following months cost of gooda zold 3 All merchand se purchs sre on account T cercent of sil purchses 5re paio for In the montn of purcnsee end 70% ne paid for In the following montih. All af the September 30 sccounta payeble to supplers will be pd during October 4 Seling en00mlnlatrette excenses for Octocer ne busgetea$94.200, exclusive of ceprecetion. These expenses willbe ped n cash. Depreclation ls budgeted at $2,350 for the month. Required: 1. Uaing the nformation provided, calcuiste or prepsre the folawing s. The budgeted ceah collections for October . The budgeted merchandise purchsses 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 31 2 Assume the following changes to the underying budgeting ssumptions (1) 50% of 5 month\'s credt ”les 5e colected In tne month the g5les are m5de rs te remaining 50%colectea 1n the following month. (2) the ending mercnanolae Inver tory t; h ya 10% of the followlng months cost of gooosso o, and (3) 20% of all purchses re paid for in the month of purcha and 80% re p5IO for In the following month. Using tnes new 5\"urmotiona, csicuiste or prepar the folowlng a The budgeted cesh collectians 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 Liabil ec and Btookholderd Equty Total abilides and stockholders cquity Raq 2A >

Solution

Answer 1-a Sales Budget Oct Nov Sales              320,000              330,000 Cash Sales - 35%              112,000              115,500 Credit Sales - 65%              208,000              214,500 Budgeted Cash Collections Oct Cash Sales              112,000 Collection from Accounts Receivables Accounts Receivables - Sep              106,000 Oct Sales - $208,000 X 40%                83,200 Total cash Collections              301,200 Answer 1-b. Merchandise Purchase Budget Oct Nov Cost of Goods Sold - 45% of Sales              144,000              148,500 Add: Ending Inventory - $148,500 X 30%                44,550 Total Needs              188,550 Less: opening Inventory              (43,200) Required Purchases              145,350 Answer 1-c. Schedule of Cash payments to Suppliers Oct Cash Payment Accounts Payable - Sep              121,800 Oct Purchases - $145,350 X 30%                43,605 Total Cash Payment to Suppliers              165,405 Cash budget Oct Opening cash Balance                62,600 Add: receipts Collection from Customers              301,200 Total Cash available              363,800 Less: Disbursements Cash Disbursement - Accounts Payable              165,405 Selling & Admn. Exp. - $94,200                94,200 Total Disbursement              259,605 Cash Balance Closing              104,195 Answer 1-d. Income Statement For the Month Ending Oct 31 Sales              320,000 Less: Cost of Goods Sold - 45% of sales              144,000 Gross Margin              176,000 Less: Selling & Admn. Exp.                96,550 Net Income                79,450 Answer 1-e. Balance Sheet As on Oct 31 Assets Current Assets Cash              104,195 Accounts receivables              124,800 Inventory                44,550              273,545 Fixed Assets Building & Equipment - $235,000 - $2,350              232,650 Total Assets              506,195 Liabilities Accounts Payable              101,745 Total liabilities              101,745 Shareholders\'s Equity Common Stock              216,000 Retained Earnings              188,450 Total Stockholders equity              404,450 Total liabilities & Stockholders\' Equity              506,195 Schedule of Retained Earnings As on Oct 31 Opening Balance              109,000 Add: net income                79,450 Closing Balance              188,450 Answer 2-a Sales Budget Oct Nov Sales              320,000              330,000 Cash Sales - 35%              112,000              115,500 Credit Sales - 65%              208,000              214,500 Budgeted Cash Collections Oct Cash Sales              112,000 Collection from Accounts Receivables Accounts Receivables - Sep              106,000 Oct Sales - $208,000 X 50%              104,000 Total cash Collections              322,000 Answer 2-b. Merchandise Purchase Budget Oct Nov Cost of Goods Sold - 45% of Sales              144,000              148,500 Add: Ending Inventory - $148,500 X 10%                14,850 Total Needs              158,850 Less: opening Inventory              (43,200) Required Purchases              115,650 Answer 2-c. Schedule of Cash payments to Suppliers Oct Cash Payment Accounts Payable - Sep              121,800 Oct Purchases - $145,350 X 20%                23,130 Total Cash Payment to Suppliers              144,930 Cash budget Oct Opening cash Balance                62,600 Add: receipts Collection from Customers              322,000 Total Cash available              384,600 Less: Disbursements Cash Disbursement - Accounts Payable              144,930 Selling & Admn. Exp. - $94,200                94,200 Total Disbursement              239,130 Cash Balance Closing              145,470 Answer 2-d. Income Statement For the Month Ending Oct 31 Sales              320,000 Less: Cost of Goods Sold - 45% of sales              144,000 Gross Margin              176,000 Less: Selling & Admn. Exp.                96,550 Net Income                79,450 Answer 2-e. Balance Sheet As on Oct 31 Assets Current Assets Cash              145,470 Accounts receivables              104,000 Inventory                14,850              264,320 Fixed Assets Building & Equipment - $235,000 - $2,350              232,650 Total Assets              496,970 Liabilities Accounts Payable                92,520 Total liabilities                92,520 Shareholders\'s Equity Common Stock              216,000 Retained Earnings              188,450 Total Stockholders equity              404,450 Total liabilities & Stockholders\' Equity              496,970 Schedule of Retained Earnings As on Oct 31 Opening Balance              109,000 Add: net income                79,450 Closing Balance              188,450