Wolfpack Company is a merchandising company that is preparing a budget for the month of July….

Wolfpack Company is a merchandising company that is preparing a
budget for the month of July. It has provided the following
information:

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Wolfpack Company
Balance Sheet
June 30
Assets
Cash $ 91,400
Accounts receivable 67,200
Inventory 31,000
Buildings and equipment, net of depreciation 165,000
Total assets $ 354,600
Liabilities and Stockholders’ Equity
Accounts payable $ 62,600
Common stock 100,000
Retained earnings 192,000
Total liabilities and stockholders’ equity $ 354,600

Budgeting Assumptions:

  1. 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.
  2. 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.
  3. The budgeted inventory balance at July 31 is $19,800.
  4. Depreciation expense is $3,300 per month. All other selling and
    administrative expenses are paid in full in the month the expense
    is incurred.
  5. The company’s cash budget for July shows expected cash
    collections of $96,300, expected cash disbursements for merchandise
    purchases of $72,000, and cash paid for selling and administrative
    expenses of $16,100.

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.