PLEASE ANSWER ALL PARTS ACCURATELY AND CLEARLY! Wheeling Company is a merchandis
ID: 2509186 • Letter: P
Question
PLEASE ANSWER ALL PARTS ACCURATELY AND CLEARLY!
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 Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $ 59,000 158,000 78,300 268,000 $563,300 212,800 216,000 134,500 563,300 The company is in the process of preparing a budget for October and has assembled the following data 1. Sales are budgeted at $580,000 for October and $590,000 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 2. The budgeted cost of goods sold is always 45% of sales and the ending merchandise inventory is always 30% of the following 3. All merchandise purchases are on account. Thirty percent of all purchases are paid for in the month of purchase and 70% are paid 4. Selling and administrative expenses for October are budgeted at $87,800, exclusive of depreciation. These expenses will be paid in collected in the following month. All of the September 30 accounts receivable will be collected in October month's cost of goods sold for in the following month. All of the September 30 accounts payable to suppliers will be paid during October cash. Depreciation is budgeted at $2,680 for the monthExplanation / Answer
Solution:
Part 1a --- Budgeted Cash Collection for October
October
November
Budgeted Sales in dollars
$580,000
$590,000
Cash Sales (35% of total sales)
$203,000
$206,500
Credit Sales (65% of total sales)
$377,000
$383,500
Collection of Credit Sales:
40% collected in the month of sale (40% of $377,000)
$150,800
60% collected in the following month (it means 60% of Oct Credit Sales are collected in Nov and similarly 60% of Sept Credit Sales are collected in October, hence cash collection of Sept Sales is Beginning Accounts Receivable )
$158,000
Total Collection from Credit Sales
$308,800
Add: Collection from Cash Sales (35% of $580,000)
$203,000
Budgeted Cash Collection for October
$511,800
Budgeted Cash Collection for October = $511,800
Part 1b --- Budgeted Merchandise Purchases for October
October
November
Budgeted Cost of Goods Sold (45% of Total Sales)
$261,000
(580,000*45%)
$265,500
(590,000*45%)
Add: Ending Merchandise Inventory (30% of following month's COGS)
$79,650
(265,500*30%)
Total Needs
$340,650
Less: Beginning Merchandise Inventory (Beginning balance)
$78,300
(given in Balance Sheet)
Budgeted Merchandise to be purchased for October
$262,350
Budgeted Merchandise Purchases for October = $262,350
Part 1c – Budgeted Cash Disbursement for Merchandise Purchases for October
October
Beginning Accounts Payable
$212,800
October Purchases (30% paid in October $262,350*30%)
$78,705
Total Budgeted Cash disbursements for merchandise purchases for October
$291,505
Part 1d – Budgeted Net Operating Income for October
October
Budgeted Sales
$580,000
Less: Budgeted Cost of Goods Sold
$261,000
Gross Profit
$319,000
Less: Selling and Administrative Expenses
$87,800
Less: Depreciation
$2,680
Net Operating Income
$228,520
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Pls ask separate question for remaining parts.
October
November
Budgeted Sales in dollars
$580,000
$590,000
Cash Sales (35% of total sales)
$203,000
$206,500
Credit Sales (65% of total sales)
$377,000
$383,500
Collection of Credit Sales:
40% collected in the month of sale (40% of $377,000)
$150,800
60% collected in the following month (it means 60% of Oct Credit Sales are collected in Nov and similarly 60% of Sept Credit Sales are collected in October, hence cash collection of Sept Sales is Beginning Accounts Receivable )
$158,000
Total Collection from Credit Sales
$308,800
Add: Collection from Cash Sales (35% of $580,000)
$203,000
Budgeted Cash Collection for October
$511,800
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