Part 2: Master Budgeting (40 points)

Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry.

Data regarding the store's operations follow:

Sales are budgeted at $360,000 for November, $380,000 for December, and $350,000 for

January.

Collections are expected to be 75% in the month of sale, 20% in the month following the sale,

and 5% uncollectible.

All accounts receivable are related to uncollected sales revenues.

The cost of goods sold is 65% of sales.

The company desires an ending merchandise inventory equal to 60% of the cost of goods sold

in the following month.

Payment for merchandise is made in the month following the purchase.

All accounts payable are related to unpaid merchandise.

Other monthly expenses to be paid in cash are $21,900.

Monthly depreciation is $20,000.

Ignore taxes.

1

(3) Prepare a Cash Budget for November. (10 points)

(4) Prepare a Budgeted Income Statement for November. (8 points)