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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 | $ 75,000 |
Accounts receivable | 50,000 |
Inventory | 30,000 |
Buildings and equipment, net of depreciation | 150,000 |
Total assets | $ 305,000 |
Liabilities and Stockholders Equity | |
Accounts payable | $ 35,300 |
Common stock | 100,000 |
Retained earnings | 169,700 |
Total liabilities and stockholders equity | $ 305,000 |
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 budgeted inventory balance at July 31 is $22,000.
- Depreciation expense is $3,000 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 $77,000, expected cash disbursements for merchandise purchases of $44,500, and cash paid for selling and administrative expenses of $15,000.
Required:
- For the month of July, calculate the following:
- Budgeted sales
- Budgeted merchandise purchases
- Budgeted cost of goods sold
- Budgeted net operating income
- Prepare a budgeted balance sheet as of July 31.
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