Wheeling Company is a merchandiser that provided a balance sheet as of September 30 as shown below:AssetsCash.Accounts receivableInventoryBuildings and equipment, net of depreciationTotal assetsLiabilities and Stockholders' EquityAccounts payableCommon stockRetained earningsTotal liabilities and stockholders' equityWheeling CompanyBalance SheetSeptember 30$ 59,00090,00032,400214,000$395,400$ 73,000216,000106,400$395,400The company is in the process of preparing a budget for October and has assembled the following data:1. Sales are budgeted at $240,000 for October and $250,000 for November. Of these sales, 35% will be for cash; the remainder will be credit sales. Forty percent of a month's creditsales 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 inOctober.2. 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.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 30accounts payable to suppliers will be paid during October.4. Selling and administrative expenses for October are budgeted at $78,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for themonth. 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 31.2. Assume the following changes to the underlying budgeting assumptions: (1) 50% of a month's credit sales are collected in the month the sales are made and the page 390remaining 50% is collected in the following month, (2) the ending merchandise inventory is always 10% of the following month's cost of goods sold, and (3) 20% of allpurchases are paid for in the month of purchase and 80% are paid for in the following month. Using these new assumptions, 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. Net operating income for the month of October.e. A budgeted balance sheet at October 31.3. Compare your answers in requirement 1 to those that you obtained in requirement 2. If Wheeling Company is able to achieve the budgeted projections described in requirement 2, willit improve the company's financial performance relative to the projections that you derived in requirement 1?

Comment - Multiple Questions Asked Cash Budget - A projected cash input and outflow over the…

Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity Wheeling Company Balance Sheet September 30 paring a budget for October and has assembled the following data: $ 59,000 90,000 32,400 214,000 $395,400 $ 73,000 216,000 106,400 $395,400

Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity Wheeling Company Balance Sheet September 30 paring a budget for October and has assembled the following data: $ 59,000 90,000 32,400 214,000 $395,400 $ 73,000 216,000 106,400 $395,400

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter5: Accounting For Retail Businesses

Section: Chapter Questions

Problem 5PA: Multiple-step income statement and balance sheet The following selected accounts and their current...

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