$2.(12$ points$)$ Weldon Industrial Gas Corporation supplies acetylene and other

compressed gases to industry. Data regarding the store's operations follow:

$$ The company sells each unit for $$55.$

Budgeted Sales:

Month October November December January

Sales in Units $32,00028,00040,00030,000$

$$ Collections are expected to be $70\%$ in the month of sale, $30\%$ in the

month following the sale.

$$ The A$/$R balance at September $30$th will be collected in full in

October.

$$ The cost of the merchandise is $$43$ per unit.

$$ In addition to meeting the current month$$s sales demand, management

wants to maintain and ending inventory balance of $10\%$ of the next

month$$s sales.

$$ The beginning inventory balance at October $1$st is $3,200$ units.

$$ Payment for merchandise is made as follows: $(1)/(2)$ paid in the month of

the purchase, $(1)/(2)$ paid the month following the purchase.

$$ The A$/$P balance at September $30$th will be paid in full in October.

$$ A dividend was paid in October for $$550,000.$

$$ Minimum cash balance is $$100,000.$

$$ The company has a line of credit for $$500,000$ at an annual interest

rate of $12\%.$ You can borrow any amount to get to the minimum of

$$100,000.$

$$ Loans are taken out on first day of month borrowed and repaid at

the end of the quarter with interest.

Balance Sheet

September $30$

Assets

Cash.............................................................................................. $ $100,000$

Accounts receivable $.....................................................................250,000$

Inventory $......................................................................................137,600$

Property, plant and equipment

$($net of $$200,000$ accumulated depreciation$)............................866,400$

Total assets $...................................................................................$ $$1,354,000$

Liabilities and Stockholders$$ Equity

Accounts payable $.........................................................................$ $ $300,000$

Common stock $.............................................................................582,000$

Retained earnings $.........................................................................472,000$

Total liabilities and stockholders$$ equity $.....................................$ $$1,354,000$

Required:

a$.$ Prepare a Sales Budget for October, November, December, and Quarter.

b$.$ Prepare a Schedule of Expected Cash Collections for October, November,

December, and Quarter.

c$.$ Prepare a Merchandise Purchases Budget for October, November, December,

and Quarter.

d$.$ Prepare a Schedule of Expected Cash Disbursements for October, November,

December, and Quarter.

e$.$ Prepare Cash Budgets for October, November, December, and Quarter.

Sales Budget

October November December Quarter

Units Sold

Sales Price per unit

Total Sales

Schedule of Expected Cash Collections

October November December Quarter

Beginning A$/$R $$250,000$

October Sales

November Sales

December Sales

Total

Purchases Budget

October November December Quarter

Budgeted Sales

$($units$)$

$+$Desired ending

inv.

$=$ total needs

$-$Beginning inv. $(3,200)$

$=$Total Purchases

X cost per unit

$=$Total purchase

cost

Schedule of Expected Cash Disbursements

October November December Quarter

Beginning A$/$P $$300,000$

October Purchases

November Purchases

December Purchases

Total

Cash Budget

October November December Quarter

Beginning Cash bal. $$100,000$

$+$Cash collections

$=$Cash Available

Less: Cash Disburse.

For Purchases

Dividend

$=$Total cash

disburse.

Excess$/($Deficiency$)$

Borrowing

Repayment

Interest

Ending Cash bal.