Wheeling Company is a merchandiser that provided a balance sheet as of September
ID: 2565120 • Letter: W
Question
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 $ 70,400 126,000 56,700 267,000 $ 520,100 $ 173,600 216,000 130,500 $ 520,100 The company is in the process of preparing a budget for October and has assembled the following data: 1. Sales are budgeted at $420,000 for October and $430,000 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. 2. 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.Explanation / Answer
Answer 1
Calculation of Budgeted Cash Collection:
Cash Sales (35%*420,000)
1,47,000.00
Collection from Credit sales (65%x420,000x40%)
1,09,200.00
Collection from Accounts receivable
1,26,000.00
Total budegted cash collection
3,82,200.00
Calculation of Budegeted Purchases:
Cost of goods sold in October (45%x420,000)
1,89,000.00
Ending Inventory in October (45%x430,000x30%)
58,050.00
(-) Opening Inventory
-56,700.00
Total Budegeted Purchases
1,90,350.00
Calculation of Budgeted Cash Disbursements:
Paid for Cash purchases (190,350x30%)
57,105.00
Paid to Accounts payable
1,73,600.00
Selling and Admin exp
89,600.00
Total Budegeted disbursements
3,20,305.00
Calculation of Budgeted Operating Income:
Sales
4,20,000.00
(-) Cost of goods sold
-1,89,000.00
2,31,000.00
(-) Selling and Admin exp
-89,600.00
(-) Depreciation
-2,670.00
Budegeted Operating Income
1,38,730.00
Wheeling Company
Budgeted Balance Sheet
Oct-31
Assets
Cash (70,400+382,200-320,305)
1,32,295.00
Accounts Receivable (420,000x65%x60%)
1,63,800.00
Inventory
58,050.00
Buildings and equipments, net of depreciation
2,64,330.00
Total Assets
6,18,475.00
Liabilities and Stockholders' Equity
Accounts Payable (190,350x70%)
1,33,245.00
Common Stock
2,16,000.00
Retained Earnings (130,500+138,730)
2,69,230.00
Total Liabilities and Stockholders' Equity
6,18,475.00
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Calculation of Budgeted Cash Collection:
Cash Sales (35%*420,000)
1,47,000.00
Collection from Credit sales (65%x420,000x40%)
1,09,200.00
Collection from Accounts receivable
1,26,000.00
Total budegted cash collection
3,82,200.00
Calculation of Budegeted Purchases:
Cost of goods sold in October (45%x420,000)
1,89,000.00
Ending Inventory in October (45%x430,000x30%)
58,050.00
(-) Opening Inventory
-56,700.00
Total Budegeted Purchases
1,90,350.00
Calculation of Budgeted Cash Disbursements:
Paid for Cash purchases (190,350x30%)
57,105.00
Paid to Accounts payable
1,73,600.00
Selling and Admin exp
89,600.00
Total Budegeted disbursements
3,20,305.00
Calculation of Budgeted Operating Income:
Sales
4,20,000.00
(-) Cost of goods sold
-1,89,000.00
2,31,000.00
(-) Selling and Admin exp
-89,600.00
(-) Depreciation
-2,670.00
Budegeted Operating Income
1,38,730.00
Wheeling Company
Budgeted Balance Sheet
Oct-31
Assets
Cash (70,400+382,200-320,305)
1,32,295.00
Accounts Receivable (420,000x65%x60%)
1,63,800.00
Inventory
58,050.00
Buildings and equipments, net of depreciation
2,64,330.00
Total Assets
6,18,475.00
Liabilities and Stockholders' Equity
Accounts Payable (190,350x70%)
1,33,245.00
Common Stock
2,16,000.00
Retained Earnings (130,500+138,730)
2,69,230.00
Total Liabilities and Stockholders' Equity
6,18,475.00
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