Wolfpack Company is a merchandising company that is preparing a budget for the m

Question

Wolfpack Company is a merchandising company that is preparing a budget for the month of July. It has provided the following information:

Budgeting Assumptions:

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.

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.

The budgeted inventory balance at July 31 is $29,200.

Depreciation expense is $4,460 per month. All other selling and administrative expenses are paid in full in the month the expense is incurred.

The company’s cash budget for July shows expected cash collections of $88,100, expected cash disbursements for merchandise purchases of $72,000, and cash paid for selling and administrative expenses of $14,940.

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.

Wolfpack Company
Balance Sheet
June 30 Assets Cash $ 75,800 Accounts receivable 59,000 Inventory 43,400 Buildings and equipment, net of depreciation 223,000 Total assets $ 401,200 Liabilities and Stockholders’ Equity Accounts payable $ 63,200 Common stock 100,000 Retained earnings 238,000 Total liabilities and stockholders’ equity $ 401,200

Explanation / Answer

Solution 1a:

Solution 1b:

Solution 1c:

Solution 1d:

Note: I have answered first 4 parts of question as per chegg policy. Kindly post separate question for answer of remaining parts.

Computation of budgeted Sales for July - Wolfpack Company Particulars Amount Expected cash collection for July $88,100.00 Less: Cash collection for June Sale $59,000.00 Cash Collection for July Sale $29,100.00 % collection in July 30% Budgeted Sales for July $97,000.00

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