COMPLETE ALL PARTS 1E - 2A. ANSWER ACCURATELY. Wheeling Company is a merchandise
ID: 2510223 • Letter: C
Question
COMPLETE ALL PARTS 1E - 2A. ANSWER ACCURATELY.
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
1 (a) Budgted cash Collections foe October Opening Balance 59,000.00 Add September AR recovery 158,000.00 Add Cash Sales of October =580000*0.35 203,000.00 Add Cash recovered from AR arising from October Sales =580000*0.65*0.4 150,800.00 Less September AP payment 212,800.00 Less October AP Payment =((580000*0.45)+79650-78300)*0.3 78,705.00 LEss Cash Expenses - Selling & Distribution excluding Depreciation =87800-2680 85,120.00 Budgeted Cash Balance Oct 194,175.00 1 (b) Budgeted merchandise purchase for October - Closing Stock for October is 30% of Cost of Goods Sold of November therefore October Closing Stock is =590000*0.45*0.3 79,650.00 Purchases for October is: Closing Stock of October 79,650.00 Add Cost of goods Sold - October =580000*0.45 261,000.00 Less Opening Stock - October 78,300.00 Budgeted Purchases for October 262,350.00 1 (c) Budgeted cash disbursement for merchandise purchase for October 30 % of Total purchases of October (as all purchases are on account) =262350*.3 78,705.00 1 (d) Budgeted Net Operating Income - October Sales for October 580,000.00 Less Cost of Goods Sold 261,000.00 Less Selling & Distribution expenses 85,120.00 Less Depreciation 2,680.00 NOI for October 231,200.00 1 (e) Balance Sheet as on 31 October Wheeling Company Balance Sheet 31st October Computation Assets Cash As computed in 1 (a) above 194,175.00 Accounts Recivable =158000+(580000*0.65*0.6)-158000 226,200.00 Inventory As computed in 1 (b) above 79,650.00 Buildings and Equipment (Net of Depreciation) =268000-2680 265,320.00 Total Assets - 765,345.00 Computation Liabilities and Stockholders equity Accounts Payable =212800-212800+(79650+0.45*580000-78300)*0.7 183,645.00 Common Stock No change 216,000.00 Retained Earnings Opening Balance + amount computed in 1(d) above 365,700.00 Total Liabilities - 765,345.00 - 2 (a) Budgted cash Collections for October Opening Balance 59,000.00 Add September AR recovery 158,000.00 Add Cash Sales of October =580000*0.35 203,000.00 Add Cash recovered from AR arising from October Sales =580000*0.65*0.5 188,500.00 Less September AP payment 212,800.00 Less October AP Payment =((580000*0.45)+590000*0.45*0.1-78300)*0.2 41,850.00 LEss Cash Expenses - Selling & Distribution excluding Depreciation =87800-2680 85,120.00 Budgeted Cash Balance Oct 268,730.00 2 (b) Budgeted merchandise purchase for October - Closing Stock for October is 10% of Cost of Goods Sold of November therefore October Closing Stock is =590000*0.45*0.1 26,550.00 Purchases for October is: Closing Stock of October 26,550.00 Add Cost of goods Sold - October =580000*0.45 261,000.00 Less Opening Stock - October 78,300.00 Budgeted Purchases for October 209,250.00 2 (c) Budgeted cash disbursement for merchandise purchase for October 20 % of Total purchases of October (as all purchases are on account) =((580000*0.45)+590000*0.45*0.1-78300)*0.2 41,850.00 2 (d) Budgeted Net Operating Income - October Sales for October 580,000.00 Less Cost of Goods Sold 261,000.00 Less Selling & Distribution expenses 85,120.00 Less Depreciation 2,680.00 NOI for October 231,200.00 2 (e) Balance Sheet as on 31 October Wheeling Company Balance Sheet 31st October Computation Assets Cash As computed in 2 (a) above 268,730.00 Accounts Recivable =158000+(580000*0.65*0.5)-158000 188,500.00 Inventory As computed in 2 (b) above 26,550.00 Buildings and Equipment (Net of Depreciation) =268000-2680 265,320.00 Total Assets - 749,100.00 Computation Liabilities and Stockholders equity Accounts Payable =212800-212800+(26550+0.45*580000-78300)*0.8 167,400.00 Common Stock No change 216,000.00 Retained Earnings Opening Balance + amount computed in 2(d) above 365,700.00 Total Liabilities - 749,100.00
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