Question
Exercise 8-18 (Algo) Cash Flows; Budgeted Income Statement and Balance Sheet [LO8-2, LO8-3, LO8-9, LO8-10] Wolfpack Company is a merchandising company that is preparing a
Exercise 8-18 (Algo) Cash Flows; Budgeted Income Statement and Balance Sheet [LO8-2, LO8-3, LO8-9, LO8-10]
Wolfpack Company is a merchandising company that is preparing a budget for the month of July. It has provided the following information:
Wolfpack Company
Balance Sheet June 30
Assets
Cash $81,800
Accounts receivable 54,200
Inventory 43,600
Buildings and equipment, net of depreciation 245,000
Total assets $424,600
Liabilities and Stockholders' Equity
Accounts payable $38,600
Common stock 100,000
Retained earnings 286,000
total liabilities and stockholders' equity $424,600
Budgeting Assumptions:
- All sales are on account. Thirty percent of the credit sales are collected in the month of sale and the remaining 70% are collected in the month subsequent to the sale. The accounts receivable at June 30 will be collected in July.
- All merchandise purchases are on account. Twenty percent of merchandise inventory purchases are paid in the month of the purchase and the remaining 80% is paid in the month after the purchase. The accounts payable at June 30 will be paid in July.
- The budgeted inventory balance at July 31 is $12,900.
- Depreciation expense is $4,900 per month. All other selling and administrative expenses are paid in full in the month the expense is incurred.
- The company's cash budget for July shows expected cash collections of $84,800, expected cash disbursements for merchandise purchases of $44,700, and cash paid for selling and administrative expenses of $15,500.
Required:
1.For the month of July, calculate the following:
a. Budgeted sales
b. Budgeted merchandise purchases
c. Budgeted cost of goods sold
d. Budgeted net operating income
2. Prepare an budgeted balance sheet as of July 31.
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