**Wheeling Company Financial Overview****Balance Sheet as of September 30****Assets**- Cash: $59,000- Accounts Receivable: $90,000- Inventory: $32,400- Buildings and Equipment, Net of Depreciation: $214,000**Total Assets: $395,400****Liabilities and Stockholders’ Equity**- Accounts Payable: $73,000- Common Stock: $216,000- Retained Earnings: $106,400**Total Liabilities and Stockholders’ Equity: $395,400**---**Budget Preparation for October**The company is preparing a budget for October with the following considerations:1. **Sales Forecasts** - October: $240,000 - November: $250,000 - 35% of these sales will be cash sales, remainder as credit sales. - 40% of credit sales are collected in the same month, 60% in the following month. - All accounts receivable from September 30 will be collected in October.2. **Cost of Goods Sold** - Always 45% of sales. - Ending inventory is consistently 30% of the following month’s cost of goods sold.3. **Purchasing and Accounts Payable** - Purchases are on account. - 30% of purchases are paid in the current month, 70% in the following month. - All accounts payable at Sept 30 will be settled in October.4. **Operating Expenses** - Selling and administrative expenses for October are set at $78,000, excluding depreciation. - Depreciation: $2,000 for the month, paid in cash. **Educational Website Content****Budgeting Calculations for October****Required:**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.**Instruction:**Complete this question by entering your answers in the tabs below.- Req 1A- Req 1B- Req 1C- Req 1D- Req 1E- Req 2A- Req 2B- Req 2C- Req 2D- Req 2E---**Preparation Guide for Budgeted Cash Collections for October:**Prepare the budgeted cash collections for October. 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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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 $ 59,000 90,000 32,400 214,000 $ 395,400 Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $ 73,000 216,000 106,400 $395,400 The company is in the process of preparing a budget for October and has assembled the following data: 1. 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 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 $78,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month. the month the sales are made, and the remaining 60% is

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q