Wheeling Company is a merchandiser that provided a balance s

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 S 59,000 90,000 32.400 214,000 5395,400 Llablltles and Stockholders\' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders\' equity $ 73.000 216.000 106.400 S395.400 The company is in the process of preparing a budget for October and has assembled the following data: I. Sales are budgeted at $240,000 for October and $250,000 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% is 2 The budgeted cost of goods sold is always 45% of sales and the ending merchandise inventory is always 30% of the following 3. All merchandise purchases are on account. Thirty percent of all purchases are paid for in the month of purchase and 70% are paid 4. Selling and administrative expenses for October are budgeted at $78,000, exclusive of depreciation. These expenses will be paid collected in the following month. All of the September 30 accounts receivable will be collected in October month\'s cost of goods sold. for in the following month. All of the September 30 accounts payable to suppliers will be paid during October. in cash. Depreciation is budgeted at $2.000 for the month. Requlrec 1. Using the information provided, calculate or prepare the following: a. The budgeted cash collections for October b. The budgeted merchandise purchases for October c. The budgeted cash disbursements for merchandise purchases for October. d. The budgeted net operating income for October. e. A budgeted balance sheet at October 31 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% is collected in the following month, (2) the ending merchandise inventory is always 10% of the following month\'s cost of goods sold, and (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: a. The budgeted cash collections for October. b. The budgeted merchandise purchases for October c. The budgeted cash disbursements for merchandise purchases for October. d. Net operating income for the month of October. e. A budgeted balance sheet at October 31

Solution

ans 1 Schedule of Expected Cash Collections October November Total sales T $240,000 250000 Accounts Receivable 90000 Cash Sales (35% for cash) S $84,000 Collection from credit sales (240000-84000)*40% 62400 Total Collections 236400 ans 2 Merchandise Purchases Budget October November Budgeted Cost of Goods Sold (45%*sales) $108,000 $112,500 Add Desired Ending Inventory (30%*next COGS $33,750 Total Needs $141,750 Less Beginning Inventory $32,400 Required Purcahses { $109,350 ans 3 Schedule of Expected Cash Disbursements- Merchandise Purchases (30% in same month and 70% in next month) January Accounts payable $73,000 October purchases (30%*P) $32,805 Total Disbursements $105,805 Cash Budget October Beginnning Cash Balance 59,000 Add Cash Collections 236,400 Total Cash Avail 295,400 Less Cash Disbursements For Inventory $105,805 For Selling & administrative Expenses 78000 Total Cash Disbursements $183,805 Excess(Deficiency) of Cash $111,595 Ending Cash Balance $111,595 Income statement sales $240,000 Less;: Cost of Good sold $108,000 Gross profit $132,000 Less: S & A exp 80000 Net Income $52,000 Balance sheet Current assets Cash $111,595 Accounts receivable $93,600 Inventory $33,750 Total Current assets $238,945 Building and equipment, net (214000-2000) 212000 Total assets $450,945 Liabilities & stockholder equity Current liabilities Accounts payable $76,545 stockholder equity Common stock 216000 Retained earnings (106400+52000) $158,400 Totl stockholder equity 374400 Total Liabilities & stockholder equity $450,945 ans 2 ans 1 Schedule of Expected Cash Collections October November Total sales T $240,000 250000 Accounts Receivable 90000 Cash Sales (35% for cash) S $84,000 Collection from credit sales (240000-84000)*50% 78000 Total Collections 252000 ans 2 Merchandise Purchases Budget October November Budgeted Cost of Goods Sold (45%*sales) $108,000 $112,500 Add Desired Ending Inventory (10%*next COGS $11,250 Total Needs $119,250 Less Beginning Inventory $32,400 Required Purcahses { $86,850 ans 3 Schedule of Expected Cash Disbursements- Merchandise Purchases (20% in same month and 80% in next month) January Accounts payable $73,000 October purchases (20%*P) $17,370 Total Disbursements $90,370 Cash Budget October Beginnning Cash Balance 59,000 Add Cash Collections 252,000 Total Cash Avail 311,000 Less Cash Disbursements For Inventory $90,370 For Selling & administrative Expenses 78000 Total Cash Disbursements $168,370 Excess(Deficiency) of Cash $142,630 Ending Cash Balance $142,630 Income statement sales $240,000 Less;: Cost of Good sold $108,000 Gross profit $132,000 Less: S & A exp 80000 Net Income $52,000 Balance sheet Current assets Cash $142,630 Accounts receivable $78,000 Inventory $11,250 Total Current assets $231,880 Building and equipment, net (214000-2000) 212000 Total assets $443,880 Liabilities & stockholder equity Current liabilities Accounts payable $69,480 stockholder equity Common stock 216000 Retained earnings (106400+52000) $158,400 Totl stockholder equity 374400 Total Liabilities & stockholder equity $443,880 If any doubt please comment. If satisfied rate