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 $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.
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.
Other monthly expenses to be paid in cash are $21,900.
Monthly depreciation is $20,000.
Ignore taxes.
Balance Sheet | ||||||||
31-Oct | ||||||||
Assets | ||||||||
Cash | $16,000 | |||||||
Accounts receivable (net of allowance for uncollectible accounts) | 74,000 | |||||||
Merchandise inventory | 140,400 | |||||||
Propery, plant and equipment (net of $500,000 accumulated depreciation) | 1,066,000 | |||||||
Total assets | $1,296,400 | |||||||
Liabilities and Stockholders' Equity | ||||||||
Accounts payable | 240,000 | |||||||
Common stock | 640,000 | |||||||
Retained earnings | 416,400 | |||||||
Total liabilities and stockholders' equity | 1296400 |
Required: a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.
c. Prepare Cash Budgets for November and December.
d. Prepare Budgeted Income Statements for November and December.
e. Prepare a Budgeted Balance Sheet for the end of December.
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