VeeLance Company is a merchandiser that provided a balance sheet as of September 30 as shown below: VeeLance Company Balance Sheet September 30 Assets Cash $ 69,400 Accounts receivable 166,000 Inventory 83,700 Buildings and equipment, net of depreciation 257,000 Total assets $ 576,100 Liabilities and Stockholders Equity Accounts payable $ 246,600 Common stock 216,000 Retained earnings 113,500 Total liabilities and stockholders equity $ 576,100 ________________________________________ The company is in the process of preparing a budget for October and has assembled the following data: 1. Sales are budgeted at $620,000 for October and $630,000 for November. Of these sales, 35% will be for cash; the remainder will be credit sales. Forty percent of a months 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 months 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 $83,800, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,570 for the month. Required: Using the information provided, calculate or prepare a statement for each of the following: a. Budgeted cash collections for October. b. Budgeted merchandise purchases for October. c. Budgeted cash disbursements for merchandise purchases for October. d. Budgeted net operating income for October. e. Budgeted balance sheet at October 31. Explain, in your own words, the purpose of a budget. o Does it guarantee performance? o Does it ensure that a company will be profitable? Assume that the company desires a gross profit margin (ratio) of 45%. If the budget is met, will the company meet the desired goal? Explain.