Part 2: Master Budgeting (40 points) Weldon Industrial Gas Corporation supplies

Question

Part 2: Master Budgeting (40 points) 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 desires an ending merchandi in the following month. 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. Ignore taxes. xtoo se inventory equal to 60% of the cost of goods sold Balance Sheet October 31 Assets Cash Accounts receivable (net of allowance for uncollectible accounts) Merchandise inventory $ 16,000 74,000 140.400 Property, plant and equipment (net of $500 000 accumulated depreciation) Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained eamings $ 240,000 640000 416.400 Total tiabitities and stockholders' equity.. (1) Calculate expected cash collections for November. erduh Sales October ecember 2) Calculate merchandise purchases for November andise Purchase

Explanation / Answer

1. Expected cash collections for November: $344000

2. Merchandise purchases for November: $241800

November Accounts receivable 74000 November sales (75% x $360000) 270000 Total cash collection $ 344000

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