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Welnor Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store’s operations follow: |
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Sales are budgeted at $320,000 for November, $340,000 for December, and $330,000 for January. |
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Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible. |
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The cost of goods sold is 65% of sales. |
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The company desires ending merchandise inventory to equal 80% of the following month’s cost of goods sold. Payment for merchandise is made in the month following the purchase. |
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Other monthly expenses to be paid in cash are $21,000. |
| ‘ | Monthly depreciation is $16,000. |
| ‘ | Ignore taxes. |
| Statement of Financial Position October 31 |
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| Assets | ||||
| Cash | $ | 22,000 | ||
| Accounts receivable (net of allowance for uncollectible accounts) | 82,000 | |||
| Merchandise inventory | 166,400 | |||
| Property, plant and equipment (net of $658,000 accumulated depreciation) | 1,170,000 | |||
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| Total assets | $ | 1,440,400 | ||
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| Liabilities and Stockholders’ Equity | ||||
| Accounts payable | $ | 199,000 | ||
| Common stock | 840,000 | |||
| Retained earnings | 401,400 | |||
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| Total liabilities and stockholders’ equity | $ | 1,440,400 | ||
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| Required: | |
| a. |
Prepare a Schedule of Expected Cash Collections for November and December. (Leave no cells blank be certain to enter “0” wherever required.) |
| Welnor Industrial Gas Corporation Schedule of Expected Cash Collections |
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| November | December | |
| Sales | $ | $ |
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| Accounts receivable, beginning balance | $ | $ |
| November sales | ||
| December sales | ||
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| Total cash collections | $ | $ |
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| b. |
Prepare a Merchandise Purchases Budget for November and December. (Input all amount as positive values.) |
| Welnor Industrial Gas Corporation Merchandise Purchases Budget |
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| November | December | |
| Budgeted cost of goods sold | $ | $ |
| (Click to select)Add desired ending merchandising inventoryAdd beginning merchandise inventoryLess beginning merchandise inventoryLess desired ending merchandising inventory | ||
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| Total needs | ||
| (Click to select)Add beginning merchandise inventoryLess desired ending merchandising inventoryLess beginning merchandise inventoryAdd desired ending merchandising inventory | ||
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| Required purchases | $ | |
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| c. |
Prepare Cash Budgets for November and December. (Leave no cells blank be certain to enter “0” wherever required. Input all amount as positive values.) |
| Welnor Industrial Gas Corporation Cash budget |
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| November | December | |
| Cash disbursement for merchandise | $ | $ |
| Other monthly cash expenses | ||
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| Total cash disbursements | $ | $ |
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| Cash balance, beginning | $ | $ |
| Add cash receipts | ||
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| Total cash available | ||
| Less cash disbursements | ||
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| Excess (deficiency) of cash available over disbursements | ||
| Financing | ||
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| Cash balance, ending | $ | $ |
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| d. |
Prepare Budgeted Income Statements for November and December. (Input all amount as positive values.) |
| Welnor Industrial Gas Corporation Budgeted Income Statements |
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| November | December | |
| (Click to select)Other monthly expensesCost of goods soldDirect materialsSalesDepreciation | $ | $ |
| (Click to select)Direct materialsOther monthly expensesDepreciationBad debt expenseAccounts payable | ||
| (Click to select)Direct materialsDepreciationOther monthly expensesCost of goods soldAccounts payable | ||
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| (Click to select)Gross marginGross loss | ||
| (Click to select)Bad debt expenseCost of goods soldAccounts receivableOther monthly expensesSales | ||
| (Click to select)DepreciationSalesCost of goods soldBad debt expenseAccounts receivable | ||
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| (Click to select)Net operating lossNet operating income | $ | $ |
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| e. |
Prepare a Budgeted Balance Sheet for the end of December. (Be sure to list the assets and liabilities in order of their liquidity.) |
| Welnor Industrial Gas Corporation Budgeted Balance Sheet December 31 |
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| (Click to select)Accounts receivableAccounts payableRetained earningsCashCommon stock | $ |
| (Click to select)Accounts receivableRetained earningsBulidings and equipmentCashAccounts payable | |
| (Click to select)Accounts receivableInventoryRetained earningsCashAccounts payable | |
| (Click to select)CashAccounts receivableAccounts payableRetained earningsProperty, plant and equipment | |
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| Total assets | $ |
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| Liabilities and Stockholders’ Equity | |
| (Click to select)Property, plant and equipmentCashInventoryAccounts receivableAccounts payable | $ |
| (Click to select)Property, plant and equipmentAccounts receivableAccounts payableInventoryCommon stock | |
| (Click to select)Retained earningsInventoryAccounts receivableAccounts payableProperty, plant and equipment | |
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| Total liabilities and stockholders’ equity | $ |
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I’m ok till I got to C thats when I started to get lost on this question. Also please double check the anwser I came up with. thanks