Reference no: EM132651997

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 $73,600

Accounts receivable $142,000

Inventory $67,500

Buildings and equipment, net of depreciation $305,000

Total assets $588,100

Liabilities and Stockholders' Equity

Accounts payable $265,600

Common stock $216,000

Retained earnings $106,500

Total liabilities and stockholders' equity $588,100

The company is in the process of preparing a budget for October and has assembled the following data:

1. Sales are budgeted at $500,000 for October and $510,000 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.

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 paid during October.

4. Selling and administrative expenses for October are budgeted at $79,800, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $3,050 for the month.

Required - Using the information provided, calculate the following:

a. Calculate the budgeted cash collections for October.

b. Calculate the budgeted merchandise purchases for October.

c. Calculate the budgeted cash disbursements for merchandise purchases for October.

d. Calculate the budgeted net operating income for October.

e. Calculate the budgeted balance sheet at October 31.