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Vlada [557]
2 years ago
5

Walker Company prepares monthly budgets. The current budget plans for a September ending merchandise inventory of 27,000 units.

Company policy is to end each month with merchandise inventory equal to 15% of budgeted sales for the following month. Budgeted sales and merchandise purchases for the next three months follow. The company budgets sales of 180,000 units in October.
Sales (Units) Purchases (Units)
July 210,000 222,000
August 290,000 290,000
September 290,000 273,500

Required:
a. Prepare the merchandise purchases budget for the months of July, August, and September.
b. Compute the ratio of ending inventory to the next month’s sales.
c. How many units are budgeted for sale in October?
Business
1 answer:
harkovskaia [24]2 years ago
6 0

Answer:

Walker Company

a. Merchandise Purchases Budget for the months of July, August, and September:

                                     July             August      September

Sales units                210,000        290,000       290,000

Ending inventory       43,500           43,500         27,000

Goods available      253,500         333,500        317,000

Beginning inventory  31,500           43,500         43,500

Purchases               222,000        290,000       273,500

b. The ratio of ending inventory to the next month's sales = 15% (Ending Inventory/Sales next month * 100)

c. The units budgeted for sale in October = 180,000 units.

Explanation:

a) Data and Calculations:

September ending inventory = 27,000 units

Ending inventory always equal to 15% of budgeted sales for the following month.

                  Sales (Units)    Purchases (Units)

July              210,000             222,000

August        290,000            290,000

September 290,000            273,500

October       180,000

                                     July             August      September      October

Sales units                210,000        290,000       290,000        180,000

Ending inventory       43,500           43,500         27,000

Goods available      253,500         333,500        317,000

Beginning inventory  31,500           43,500         43,500         27,000

Purchases               222,000        290,000       273,500

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Assume that TarMart purchased equipment at the beginning of fiscal year 2016 for $480,000 cash. The equipment had an estimated u
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Answer:

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depreciation year 1 = 2 x 1/8 x $480,000 = $120,000

depreciation year 2 = 2 x 1/8 x $360,000 = $90,000

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In year 4, depreciation expense wil be higher using the straight line method.

4. Assume TarMart uses the straight-line depreciation method for its equipment. Also assume that at fiscal year-end 2020, TarMart sold the equipment purchased at the beginning of fiscal year 2016 for $200,000 cash. Prepare the journal entry to record the sale of the equipment at year-end 2020.

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Dr Accumulated depreciation - equipment 225,000

Dr Loss on sale of equipment 55,000

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During the period, Sanchez Company sold some excess equipment at a loss. The following information was collected from the compan
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Answer:

1) For the equipment that was sold, determine its original cost, its accumulated depreciation, and the cash received from the sale.

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2) Sanchez Company uses the indirect method for the Operating Activities section of the cash flow statement. What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from Operating Activities?

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3) What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from Investing Activities?

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