Question
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,
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 $370,000 for January. Collections are expected to be 75% in the month of sale, 22% in the month following the sale, and 3% uncollectible. The cost of goods sold is 73% of sales. The company desires an ending merchandise inventory equal to 85% of the cost of goods sold in the following month. Payment for merchandise is made in the month following the purchase. Other monthly expenses to be paid in cash are $21,400. Monthly depreciation is $16,400. Ignore taxes.
Balance Sheet October 31 | ||
Assets | ||
Cash | $ | 22,400 |
Accounts receivable (net of allowance for uncollectible accounts) | 82,400 | |
Merchandise Inventory | 223,380 | |
Property, plant and equipment (net of $662,000 accumulated depreciation) | 1,170,000 | |
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Total assets | $ | 1,498,180 |
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Liabilities and Stockholders Equity | ||
Accounts payable | $ | 199,400 |
Common stock | 880,000 | |
Retained earnings | 418,780 | |
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Total liabilities and stockholders equity | $ | 1,498,180 |
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Required: |
a. | Prepare a Schedule of Expected Cash Collections for November and December. |
b. | Prepare a Merchandise Purchases Budget for November and December. (Input all amounts as positive values. Do not round intermediate calculations.) |
c. | Prepare Cash Budgets for November and December. (Input all amounts as positive values.) |
d. | Prepare Budgeted Income Statements for November and December. |
e. | Prepare a Budgeted Balance Sheet for the end of December. |
rev: 12_12_2017_QC_CS-112143
References
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