EXERCISE 8-17 Cash Flows; Budgeted Income Statement and Balance Sheet LO 8-2, LO 8-3, LO 8-4, L08-9, L08-10 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. 90,000 32,400 214,000 $395.400 Liabilities and Stockholders' Equity Accounts payable Common stock. 73,000 216,000 106,400 Total liabilities and stockholders' equity.$395,400 The company is in the process of preparing a budget for October and has assembled the following data: I. Sales are budgeted at $240,000 for October and S250.000 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. 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. Selling and administrative expenses for October are budgeted at $78,000, exclusive of depre- ciation. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month. 2 3. 4. EXERCISE 8-17 Cash Flows; Budgeted Income Statement and Balance Sheet LO 8-2, LO 8-3, LO 8-4, L08-9, L08-10 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. 90,000 32,400 214,000 $395.400 Liabilities and Stockholders' Equity Accounts payable Common stock. 73,000 216,000 106,400 Total liabilities and stockholders' equity.$395,400 The company is in the process of preparing a budget for October and has assembled the following data: I. Sales are budgeted at $240,000 for October and S250.000 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. 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. Selling and administrative expenses for October are budgeted at $78,000, exclusive of depre- ciation. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month. 2 3. 4
