Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 8, Problem 17E
Wheeling Company is a merchandiser that provided a balance sheet as of September 30 as shown below:
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. Fortypercent 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. Allof the September 30
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 followingmonth. 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
Required:
Using the information provided, calculate or prepare the following:
a. The
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 500 o 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 S0°o aie paid for in the following month. Using these new assumptions, calculate orprepare 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.
3. Compare your answers in requirement 1 to those that you obtained in requirement 2. If ‘heeling Company is able to achieve the budgeted projectionsdescribed in requirement 2, will it improve the company’s financial performance relative to the projections that you derived in requirement 1?
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Cash Flows; Budgeted Income Statement and Balance Sheet
Wolfpack Company is a merchandising company that is preparing a budget for the month of July. It has provided the following information:
Budgeting Assumptions:
1. All sales are on account. Thirty percent of the credit sales are collected in the month of sale and the remaining 70% are collected in the month subsequent to the sale. The accounts receivable at June 30 will be collected in July.
2. All merchandise purchases are on account. Twenty percent of merchandise inventory purchases are paid in the month of the purchase and the remaining 80% is paid in the month after the purchase.
3. The budgeted inventory balance at July 31 is $22,000.
4. Depreciation expense is $3,000 per month. All other selling and administrative expenses are paid in full in the month the expense is incurred.
5. The company’s cash budget for July shows expected cash collections of $77,000, expected cash disbursements for merchandise purchases of $44,500, and…
Required:
1. Prepare a schedule of expected cash collections for July, August, and September.
1. Cash Collections for Q3
July
August
September
Q3
From A/R
From July sales
From Aug sales
From Sep sales
Total cash collections
1. Prepare a budgeted income statement for the month ended July 31st. Use an absorption format.
a. Calculate the estimated operating cycle for the month of July. (Hint: Use 30 days in the numerator to calculate the average collection period and the average sales period.)
Chapter 8 Solutions
Introduction To Managerial Accounting
Ch. 8 - What is a budget? What is budgetary control?Ch. 8 - Prob. 2QCh. 8 - What is meant by the term responsibility...Ch. 8 - What is a master budget? Briefly describe its...Ch. 8 - Why is the sales forecast the starting point in...Ch. 8 - “As a practical matter, planning and control mean...Ch. 8 - Prob. 7QCh. 8 - What is a self-imposed budget? What are the major...Ch. 8 - How can budgeting assist a company in planning its...Ch. 8 - Prob. 10Q
Ch. 8 - The Excel worksheet form that appears below is to...Ch. 8 - The Excel worksheet form that appears below is to...Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Prob. 2F15Ch. 8 - Prob. 3F15Ch. 8 - Prob. 4F15Ch. 8 - Morganton Company makes one product and it...Ch. 8 - Prob. 6F15Ch. 8 - Prob. 7F15Ch. 8 - Prob. 8F15Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Prob. 11F15Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Schedule of Expected Cash Collections LOB-2 Silver...Ch. 8 - Down Under Products, Ltd., of Australia has...Ch. 8 - Direct Materials Budget LOB-4 Three grams of musk...Ch. 8 - Direct Labor Budget LOB-5 The production manager...Ch. 8 - Manufacturing Overhead Budget L.08—6 The direct...Ch. 8 - Weller Company’s budgeted unit sales for the...Ch. 8 - Cash Budget LOB—8 Garden Depot is a retailer that...Ch. 8 - Gig Harbor is the wholesale distributor of a small...Ch. 8 - The management of Mecca copy, a photocopying...Ch. 8 - Production and Direct Materials Budgets LO8—,...Ch. 8 - Cash Budget Analysis LOB—8 A cash budget, by...Ch. 8 - Prob. 12ECh. 8 - Schedules of Expected Cash Collections and...Ch. 8 - Sales and Production Budgets L08—2, L08—3 The...Ch. 8 - Direct Labor and Manufacturing Overhead Budgets...Ch. 8 - Direct Materials and Direct Labor Budgets LOB—4,...Ch. 8 - Cash Flows; Budgeted Income Statement and Balance...Ch. 8 - Cash Flows; Budgeted Income Statement and Balance...Ch. 8 - Cash Budget: Income Statement: Balance Sheet...Ch. 8 - Cash Budget; Income Statement: Balance Sheet;...Ch. 8 - Schedules of Expected Cash Collections and...Ch. 8 - Evaluating a Company’s Budget Procedures LOB—1...Ch. 8 - Prob. 23PCh. 8 - Cash Budget with Supporting Schedules L08-2,...Ch. 8 - Prob. 25PCh. 8 - Prob. 26PCh. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Completing a Master Budget LOB—2, LO8—4, LO8—7,...Ch. 8 - Prob. 30PCh. 8 - Completing a Master Budget LOB-2, LOB-4, LOB-7,...
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