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 $ 77,400 Accounts receivable 146,000 Inventory 70,200 Buildings and equipment, net of depreciation 280,000 Total assets $ 573,600 Liabilities and Stockholders’ Equity Accounts payable $ 251,100 Common stock 216,000 Retained earnings 106,500 Total liabilities and stockholders’ equity $ 573,600 The company is in the process of preparing a budget for October and has assembled the following data: Sales are budgeted at $520,000 for October and $530,000 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 collected in the following month. All of the September 30 accounts receivable will be collected in October. 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. 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. Selling and administrative expenses for October are budgeted at $80,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,800 for the month. 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: e. A budgeted balance sheet at October 31. repare a budgeted balance sheet at October 31. Assume that 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. Wheeling Company Balance Sheet October 31 Assets Total assets $0 Liabilities and Stockholders' Equity Total liabilities and stockholders' equity $0
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 | $ | 77,400 |
| 146,000 | ||
| Inventory | 70,200 | |
| Buildings and equipment, net of |
280,000 | |
| Total assets | $ | 573,600 |
| Liabilities and |
||
| Accounts payable | $ | 251,100 |
| Common stock | 216,000 | |
| 106,500 | ||
| Total liabilities and stockholders’ equity | $ | 573,600 |
The company is in the process of preparing a budget for October and has assembled the following data:
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Sales are budgeted at $520,000 for October and $530,000 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 collected in the following month. All of the September 30 accounts receivable will be collected in October.
-
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.
-
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.
-
Selling and administrative expenses for October are budgeted at $80,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,800 for the month.
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:
e. A budgeted balance sheet at October 31.
repare a budgeted balance sheet at October 31. Assume that 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.
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