Reference no: EM132549290

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

1. Sales are budgeted at $360,000 for November, $380,000 for December, and $350,000 for January.
2. Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible.
3. The cost of goods sold is 65% of sales.
4. The company desires an ending merchandise inventory equal to 60% of the cost of goods sold in the following month.
5. Payment for merchandise is made in the month following the purchase.
6. Other monthly expenses to be paid in cash are $21,900.
7. Monthly depreciation is $20,000.

Balance Sheet October 31

Assets

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

Required:

Question 1. Prepare Schedule of Expected Cash Collections for November and December.

Question 2. Prepare Merchandise Purchases Budget for November and December.

Question 3. Prepare Cash Budgets for November and December.

Question 4. Prepare Budgeted Income Statements for November and December.

Question 5. Prepare Budgeted Balance Sheet for the end of December.