Wheeling Company Is a merchandiser that provided a balance sheet as of September

Question

Wheeling Company Is a merchandiser that provided a balance sheet as of September 30 as shown below: Ing Company Balance Sheet Cash Accounts recelvable Inventory Buildings and equipment, net of depreciation Total assets $ 75,800 154,000 75,600 293,000 $598,400 Liabilitles and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilitles and stockholders' equity $244,900 216,000 137,500 $598400 The company is in the process of preparing a budget for October and has assembled the following data: 1. Sales are budgeted at $560,000 for October and $570,000 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 collected in the following month. All of the September 30 accounts receivable will be collected in October 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 paia during October. 4. Selling and administrative expenses for October are budgeted at $80,000, exclusive of depreciation. These expenses will be paid

Explanation / Answer

1.b.

1.c.

1.d.

Working:

1.e.

2.a.

2.b.

2.c.

2.d.  

Working:

2.e.

Budgeted merchandise purchases October Budgeted Sales 560000 Cost of goods sold (45%) 252000 Add: Ending inventory 76950 328950 Less: Beginning inventory 75600 Budgeted Purchases 253350

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