Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
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 | $ 84,800 |
Accounts receivable | 62,200 |
Inventory | 43,400 |
Buildings and equipment, net of depreciation | 153,000 |
Total assets | $ 343,400 |
Liabilities and Stockholders Equity | |
Accounts payable | $ 62,400 |
Common stock | 100,000 |
Retained earnings | 181,000 |
Total liabilities and stockholders equity | $ 343,400 |
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 $36,200.
- Depreciation expense is $3,060 per month. All other selling and administrative expenses are paid in full in the month the expense is incurred.
- The companys cash budget for July shows expected cash collections of $94,300, expected cash disbursements for merchandise purchases of $73,800, and cash paid for selling and administrative expenses of $18,340.
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
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started