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 purchases 60% of its merchandise in the month prior to the month of sale and 40% in the month of sale. Payment for merchandise is made in themonth following the purchase.
• Other monthly expenses to be paid in cash are $21,900.
• Monthly depreciation is $20,000.
• Ignore taxes.
Statement of Financial Position
October 31
|
Assets
|
|
|
Cash |
$ 16,000 |
|
Accounts receivable |
|
|
(net of allowance for uncollectible accounts) |
74,000 |
|
Inventory |
140,400 |
|
Property, 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 |
$1,296,400 |
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.