Cash Flows ; Budgeted Income Statement and Balance Sheet LO 8-2, LO 8-4, LO8-9, LO8-1O Volfpack 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 cash paid for selling and administrative expenses of $15,000. Required: 1. For the month of July, calculate the following: a. Budgeted sales b. Budgeted merchandise purchases c. Budgeted cost of goods sold d. Budgeted net operating income 2. Prepare a budgeted balance sheet as of July 31.
Cash Flows ; Budgeted Income Statement and Balance Sheet LO 8-2, LO 8-4, LO8-9, LO8-1O Volfpack 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 cash paid for selling and administrative expenses of $15,000. Required: 1. For the month of July, calculate the following: a. Budgeted sales b. Budgeted merchandise purchases c. Budgeted cost of goods sold d. Budgeted net operating income 2. Prepare a budgeted balance sheet as of July 31.
Solution Summary: The author explains that budgets are prepared for maintaining budgetary control over various departments.
Cash Flows; Budgeted Income Statement and Balance Sheet LO 8-2, LO 8-4, LO8-9, LO8-1O Volfpack 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 cash paid for selling and administrative expenses of $15,000. Required: 1. For the month of July, calculate the following: a. Budgeted sales b. Budgeted merchandise purchases c. Budgeted cost of goods sold d. Budgeted net operating income 2. Prepare a budgeted balance sheet as of July 31.
Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.
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