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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
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 | $ | 92,200 |
Accounts receivable | 52,400 | |
Inventory | 40,800 | |
Buildings and equipment, net of depreciation | 219,000 | |
Total assets | $ | 404,400 |
Liabilities and Stockholders Equity | ||
Accounts payable | $ | 34,400 |
Common stock | 100,000 | |
Retained earnings | 270,000 | |
Total liabilities and stockholders equity | $ | 404,400 |
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 $10,700.
- Depreciation expense is $4,380 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 $93,200, expected cash disbursements for merchandise purchases of $44,700, and cash paid for selling and administrative expenses of $22,820.
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 a budgeted balance sheet as of July 31.
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