Reference no: EM131961924

Problem - Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:

• Sales are budgeted at $390,000 for November, $410,000 for December, and $400,000 for January.
• Collections are expected to be 80% in the month of sale and 20% in the month following the sale.
• The cost of goods sold is 73% of sales.
• The company desires an ending merchandise inventory equal to 80% 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 $20,900.
• Monthly depreciation is $20,700.
• Ignore taxes.

Balance Sheet October 31
Assets
Cash	$21,700
Accounts receivable	82,700
Merchandise inventory	227,760
Property, plant and equipment (net of $593,000 accumulated depreciation)	1,003,000
Total assets	$1,335,160
Liabilities and Stockholders' Equity
Accounts payable	$195,700
Common stock	580,000
Retained earnings	559,460
Total liabilities and stockholders' equity	$1,335,160

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.