Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations
Question:
Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:
Sales are budgeted at $300,000 for November, $320,000 for December, and $310,000 for January.
Collections are expected to be 75% in the month of sale and 25% in the month following the sale.
The cost of goods sold is 76% of sales.
The company desires an ending merchandise inventory equal to 80% 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 $20,600.
Monthly depreciation is $20,400.
Ignore taxes.
Balance Sheet | |
October 31 | |
Assets |
|
Cash | $ 21,400 |
Accounts receivable | 82,400 |
Merchandise inventory | 182,400 |
Property, plant and equipment (net of $590,000 accumulated depreciation) | 1,000,000 |
Total assets | $ 1,286,200 |
Liabilities and Stockholders' Equity |
|
Accounts payable | $ 195,400 |
Common stock | 550,000 |
Retained earnings | 540,800 |
Total liabilities and stockholders' equity | $ 1,286,200 |
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.