I need help with 1E-2E. Wheeling Company is a merchandiser that provided a balan
ID: 2395852 • Letter: I
Question
I need help with 1E-2E.
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 $ 61,000 174,000 89,100 249,000 $573100 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $224,600 216,000 132,500 573,100 The company is in the process of preparing a budget for October and has assembled the following data I. Sales are budgeted at $660,000 for October and $670,000 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 $96,600, exclusive of depreciation. These expenses will be paid 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 in cash. Depreciation is budgeted at $2,490 for the month. Required 1. Using the information provided, calculate or prepare 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. 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 50% 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 80% are paid for in the following month. Using these new assumptions, calculate or prepare 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 31Explanation / Answer
(a) Cash collection for October :-
Cash Sale (660000 * 35%)
231000
October-Credit sale collection (660000 – 231000) * 40%
171600
September -Credit sale Collection
174000
Cash collection for October
576600
(b) Budgeted Merchandise Purchase for October :-
Sales for October
660000
COGS for October (45% * 660000) (A)
297000
(+) Ending Merchandise Inventory (B)
90450
(-) Beginning Merchandise Inventory (30% * 297000) (C)
89100
Budgeted Merchandise Purchase for October (A + B – C)
298350
*Ending Merchandise Inventory for October = 30% of November COGS
November COGS = 670000 * 45% = 301500
Ending Inventory for October = 301500 * 30% = 90450
(c) Budgeted Cash disbursement for Merchandise purchase for October:-
October Purchase
298350
Cash disbursement in October for October Purchase (298350 * 30%)
89505
Cash disbursement in November for October Purchase (298350 * 70%)
208845
(d) Net Operating Income for October :-
Sale
660000
(-) COGS
297000
(-) S & A Exp
96600
(-) Depreciation
2490
Net Operating Income for October
263910
(e) Budgeted Balance sheet at October 31 :-
Assets
Cash
226895
Account Receivable (429000 * 60%)
257400
Inventory
90450
Building & Equipment (Net) (2490000 – 2490)
246510
Total Assets
821255
Liabilities & Stockholders Equity
Account Payable
208845
Common Stock
216000
Retained Earning (132500 + 263910)
396410
TotalLiabilities & Stockholders Equity
821255
Total Cash Available in October:-
Opening Balance
61000
Cash collection for October
576600
Cash disbursement in October for October Purchase (298350 * 30%)
-89505
Cash disbursement in October for September Purchase
-224600
S & A Exp
-96600
Total Cash Available in October
226895
2 (a) Cash collection for October :-
Cash Sale (660000 * 35%)
231000
October-Credit sale collection (660000 – 231000) * 50%
214500
September -Credit sale Collection
174000
Cash collection for October
619500
(b) Budgeted Merchandise Purchase for October :-
Sales for October
660000
COGS for October (45% * 660000) (A)
297000
(+) Ending Merchandise Inventory (B)
30150
(-) Beginning Merchandise Inventory (C)
89100
Budgeted Merchandise Purchase for October (A + B – C)
238050
*Ending Merchandise Inventory for October = 10% of November COGS
November COGS = 670000 * 45% = 301500
Ending Inventory for October = 301500 * 10% = 30150
(c) Budgeted Cash disbursement for Merchandise purchase for October:-
October Purchase
238050
Cash disbursement in October for October Purchase (238050 * 20%)
47610
Cash disbursement in November for October Purchase (238050 * 80%)
190440
(d) Net Operating Income for October :-
Sale
660000
(-) COGS
297000
(-) S & A Exp
96600
(-) Depreciation
2490
Net Operating Income for October
263910
(e) Budgeted Balance sheet at October 31 :-
Assets
Cash
311690
Account Receivable (429000 * 50%)
214500
Inventory
30150
Building & Equipment (Net) (2490000 – 2490)
246510
Total Assets
802850
Liabilities & Stockholders Equity
Account Payable
190440
Common Stock
216000
Retained Earning (132500 + 263910)
396410
TotalLiabilities & Stockholders Equity
802850
Total Cash Available in October:-
Opening Balance
61000
Cash collection for October
619500
Cash disbursement in October for October Purchase
-47610
Cash disbursement in October for September Purchase
-224600
S & A Exp
-96600
Total Cash Available in October
311690
Cash Sale (660000 * 35%)
231000
October-Credit sale collection (660000 – 231000) * 40%
171600
September -Credit sale Collection
174000
Cash collection for October
576600
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.