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