Reference no: EM132500407
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
Balance Sheet October 31
Assests
Cash $16,000
Accounts receivable (net of allowance for uncollectible accounts) $74,000
Merchandise 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
Question A. How do you make a schedule of expected cash collections for November and December
Question B. How do you make a merchandise purchases budget for November and December
Question C. Prepare Cash budgets for November and December.