Weldon Industrial Gas Corporation supplies acetylene and other compressed gases

Question

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

Sales are budgeted at $310,000 for November, $330,000 for December, and $320,000 for January.

Collections are expected to be 80% in the month of sale, 16% in the month following the sale, and 4% uncollectible.

The company desires an ending merchandise inventory equal to 85% of the cost of goods sold in the following month. Payment for merchandise is made in the month following the purchase.

Required:

Prepare a Schedule of Expected Cash Collections for November and December.

Prepare a Merchandise Purchases Budget for November and December. (Input all amounts as positive values. Do not round intermediate calculations.)

Prepare Cash Budgets for November and December. (Input all amounts as positive values.)

Prepare Budgeted Income Statements for November and December.

Prepare a Budgeted Balance Sheet for the end of December.

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

Explanation / Answer

Answer a. Schedule of Expected Cash Collections Nov Dec Sales           310,000          330,000 Expected Collection Accounts Receivables             81,300 Nov Sales           248,000             49,600 Dec Sales          264,000 Total Collection           329,300          313,600 Answer b. Merchandise Purchase Budget Nov Dec Expected Sales           310,000          330,000 Cost of Goods Sold (77% of Sales)           238,700          254,100 Add: Closing Stock of Inventory           215,985          209,440 Total Needs           454,685          463,540 Less: Opening Stock of Inventory           202,895          215,985 Purchases of Merchandise Inventory           251,790          247,555 Answer c. Cash Budget Nov Dec Cash balance at the Beginning             21,300          132,000 Add: Cash Collection from Sales           329,300          313,600 Total cash available           350,600          445,600 Less: Cash Disbursements Cash paid for Inventory           198,300          251,790 Monthly Cash Expenses             20,300             20,300 Total Cash Disbursements           218,600          272,090 Cash Balance at the end           132,000          173,510 Answer d. Budgeted Income Statement Nov Dec Sales           310,000          330,000 Less: Cost of Goods Sold           238,700          254,100 Gross Margin             71,300             75,900 Less: Expenses Cash Exp.             20,300             20,300 Dep.             15,300             15,300 Bad Debts             12,400             13,200 Total Expenses             48,000             48,800 Net Income             23,300             27,100 Answer e. Budgeted Balance Sheet As on Dec 31 Assets Current Assets Cash           173,510 Accounts Receivables (Net)             52,800 Merchandise Inventory           209,440 Total Current Assets          435,750 Fixed Assets Property, Plant & Equipment (Net of $683,600 accumulated Dep.)       1,139,400 Total Assets       1,575,150 Liabilities and Stockholders' Equity Liability Current Liabilities Accounts Payable          247,555 Total Liabilities          247,555 Stockholders Equity Common Stock           760,000 Retained Earnings           567,595 Total Stockholders Equity       1,327,595 Total Liabilities & Stockholders Equity       1,575,150

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