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 $45.

Budgeted Sales:

Month	October	November	December	January
Sales in Units	30,000	25,000	40,000	30,000

Collections are expected to be 70% in the month of sale, 30% in the month following the sale.

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

The cost of the merchandise is $37 per unit.

In addition to meeting the current months sales demand, management wants to maintain and ending inventory balance of 10% of the next months sales.

The ending inventory balance at September 30th is 3,000 units.

Payment for merchandise is made as follows: paid in the month of the purchase, paid the month following the purchase.

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

A dividend of $300,000 was paid in October and a $200,000 was paid in November.

The company must maintain a minimum cash balance of $10,000.

The company has a line of credit for $500,000 at a 10% annual interest rate. Borrowings are made the first day of the month, and repaid the last day of the month. Repayments will only be made when repayment of the total principal and interest can be made. No partial repayments.

	Balance Sheet
	September 30
	Assets
	Cash.............................................................................................	$ 56,000
	Accounts receivable.....................................................................	250,000
	Inventory......................................................................................	111,000
	Property, plant and equipment (net of $500,000 accumulated depreciation)............................	913,400
	Total assets...................................................................................	$1,330,400
	Liabilities and Stockholders Equity
	Accounts payable.........................................................................	$ 42,000
	Common stock.............................................................................	840,000
	Retained earnings.........................................................................	448,400
	Total liabilities and stockholders equity.....................................	$1,330,400

Required:

a.

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

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

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

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

Sales Budget:

	October	November	December	Quarter
Sales in units
Sales price
Total sales

Schedule of Expected Cash Collections:

	October	November	December	Quarter
Beginning A/R
October Sales
November Sales
December Sales
Total

Purchases Budget:

	October	November	December	Quarter
Sales in units
+Desired end. Inventory
=Total needs
-Beginning Inventory
=Total purchases
x Cost per unit
=Total cost of purchases

Schedule of Expected Cash Payments:

	October	November	December	Quarter
Beg. A/P
October Purchases
November Purchases
December Purchases
Total payments

Cash Budget:

	October	November	December	Quarter
Beg. Cash Bal.
+Cash Collections
=Cash Available
Cash Payments:
Cash paid for purchases
Cash paid for dividends
Total cash payments
Cash excess/(deficiency)
Borrowings
Repayments
Interest
Cash, ending bal.