Assets Cash $ 66,800 Accounts receivable 150,000 Inventory 72,900 Buildings and equipment, net of depreciation 243,000...

Assets
Cash	$	66,800
Accounts receivable		150,000
Inventory		72,900
Buildings and equipment, net of depreciation		243,000
Total assets	$	532,700
Liabilities and Stockholders’ Equity
Accounts payable	$	177,200
Common stock		216,000
Retained earnings		139,500
Total liabilities and stockholders’ equity	$	532,700

The company is in the process of preparing a budget for October and has assembled the following data:

Sales are budgeted at $540,000 for October and $550,000 for November. Of these sales, 35% will be for cash; the remainder will be credit sales. Forty percent of a month’s 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.
The budgeted cost of goods sold is always 45% of sales and the ending merchandise inventory is always 30% of the following month’s cost of goods sold.
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.
Selling and administrative expenses for October are budgeted at $93,800, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,430 for the month.

Required:

1. Using the information provided, calculate or prepare the following:

a. The budgeted cash collections for October.

b. The budgeted merchandise purchases for October.

c. The budgeted cash disbursements for merchandise purchases for October.

d. The budgeted net operating income for October.

e. A budgeted balance sheet at October 31.

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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