Reference no: EM132548831
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 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
Assets Cash ............................................................................................. $ 16,000
Accounts receivable............................................................ 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:
Question a. Prepare a Schedule of Expected Cash Collections for November and December.
Question b. Prepare a Merchandise Purchases Budget for November and December.
Question c. Prepare Cash Budgets for November and December.
Question d. Prepare Budgeted Income Statements for November and December