Welnor Industrial Gas Corporation supplies acetylene and other compressed gases

Question

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

Sales are budgeted at $300,000 for November, $320,000 for December, and $310,000 for January.

Collections are expected to be 75% in the month of sale, 22% in the month following the sale, and 3% uncollectible.

The company desires ending merchandise inventory to equal 80% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

Prepare Cash Budgets for November and December. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.)

Prepare a Budgeted Balance Sheet for the end of December. (Be sure to enter your answers in the order of liquidity. Input all amounts as positive values. Omit the "$" sign in your response.)

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

Explanation / Answer

Collection from customers Month November December Sales $ 3,00,000.00 $ 3,20,000.00 Collection from accounts receivable $     81,400.00 Collections from November sale $ 2,25,000.00 $     66,000.00 Collection from December sale $ 2,40,000.00 Total collection $ 3,06,400.00 $ 3,06,000.00 Month November December January Sales $ 3,00,000.00 $ 3,20,000.00 $ 3,10,000.00 Cost of goods sold $ 2,28,000.00 $ 2,43,200.00 $ 2,35,600.00 (76% of sales) Ending inventory (80% of the following month's cost of goods sold) $ 1,94,560.00 $ 1,88,480.00 Total reqirement $ 4,22,560.00 $ 4,31,680.00 Beginning inventory $ 1,82,400.00 $ 1,94,560.00 Purchase $ 2,40,160.00 $ 2,37,120.00 Payment of accounts payable $ 1,98,400.00 Payment for November purchase $ 2,40,160.00 Income statement Months November December Sales $ 3,00,000.00 $ 3,20,000.00 Less: cost of goods spold $ 2,28,000.00 $ 2,43,200.00 Gross Profit $     72,000.00 $     76,800.00 other expenses $   -20,400.00 $   -20,400.00 Depreciation $   -15,400.00 $   -15,400.00 Bad debt $     -9,000.00 $     -9,600.00 Net income $     27,200.00 $     31,400.00 Welnor Industrial Gas Corporation Cash Budget Month November December Cash disbursements for merchandise $ 1,98,400.00 $ 2,40,160.00 Other monthly cash expenses $     20,400.00 $     20,400.00 Total cash disbursements $ 2,18,800.00 $ 2,60,560.00 Cash balance, beginning $     21,400.00 $ 1,09,000.00 Add cash receipts $ 3,06,400.00 $ 3,06,000.00 Total cash available $ 3,27,800.00 $ 4,15,000.00 Less cash disbursement $ 2,18,800.00 $ 2,60,560.00 Excess (deficiency) of cash available over disbursements $ 1,09,000.00 $ 1,54,440.00 Financing $                    -   $                    -   Closing cash balance $ 1,09,000.00 $ 1,54,440.00 Welnor Industrial Gas Corporation Budgeted Balance Sheet Dec-31 Assets Cash $    1,54,440.00 accounts receivable $       70,400.00 merchandise inventory $    1,88,480.00 property plant and equipment $ 11,39,200.00 Total assets $ 15,52,520.00 Liabilities and Stockholders' equity accounts payable $    2,37,120.00 common stock $    7,70,000.00 retained earnings $    5,45,400.00 $ 15,52,520.00

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