Question
Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: Sales are budgeted at $350,000 for November,
Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:
Sales are budgeted at $350,000 for November, $370,000 for December, and $360,000 for January.
Collections are expected to be 80% in the month of sale and 20% in the month following the sale.
The cost of goods sold is 69% of sales.
The company desires an ending merchandise inventory equal to 70% 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 $22,300.
Monthly depreciation is $22,100.
Ignore taxes.
Balance Sheet October 31 | ||||||
Assets | ||||||
Cash | $ | 23,100 | ||||
Accounts receivable | 84,100 | |||||
Merchandise inventory | 169,050 | |||||
Property, plant and equipment (net of $605,000 accumulated depreciation) | 1,015,000 | |||||
Total assets | $ | 1,291,250 | ||||
Liabilities and Stockholders' Equity | ||||||
Accounts payable | $ | 197,100 | ||||
Common stock | 950,000 | |||||
Retained earnings | 144,150 | |||||
Total liabilities and stockholders' equity | $ | 1,291,250 | ||||
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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