Weller Industrial Gas Corporation supplies acetylene and other compressed gases
ID: 2582862 • Letter: W
Question
Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry.
Data regarding the store's operations follow:
Sales are budgeted at $330,000 for November, $350,000 for December, and $340,000 for January.
Collections are expected to be 70% in the month of sale and 30% in the month following the sale.
The cost of goods sold is 67% of sales.
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.
Other monthly expenses to be paid in cash are $22,100.
Monthly depreciation is $21,900.
Ignore taxes.
Required: Complete this question by entering your answers in the tabs below.
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.
Balance Sheet October 31 Assets Cash Accounts receivable Merchandise inventory Property, plant and equipment (net of $603,eee accumulated depreciation) Total assets $22,9ee 83,900 187,935 1,013,e00 $1,307,735 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $ 196,9ee 710,000 400,835 $1,307,735Explanation / Answer
Solution:
Part a – Schedule of Expected Cash Collections
Schedule of Expected Cash Collections
November
December
Sales
$330,000
$350,000
Schedule of Expected Cash Collections
Accounts Receivable
$83,900
(given)
November Sales
$231,000
(330,000*70%)
99000
(330,000*30%)
December Sales
245000
(350,000*70%)
Total Cash Collections
$314,900
$344,000
Part b -- Merchandise Purchases Budget for November and December
November
December
Budgeted Cost of Goods Sold
(Sale Value x 67%)
$221,100
(330,000*67%)
$234,500
(350,000*67%)
Plus: Desired Ending Inventory
$199,325
(234,500*85%)
$193,630
(Jan Sales 340,000*67% COGS x 85%)
Total Needs
$420,425
$428,130
Less: Estimated Beginning Inventory
$187,935
(given)
$199,325
(Ending inventory of Nov month)
Required Purchases
$232,490
$228,805
Part c -- Cash Budgets for November and December
November
December
Cash disbursements for merchandise
$196,900
$232,490
Other monthly cash expenses
$22,100
$22,100
Total cash disbursements
$219,000
$254,590
Beginning cash balance
$22,900
$118,800
Add cash receipts (from part a)
$314,900
$344,000
Total cash available
$337,800
$462,800
Less: cash disbursements
$219,000
$254,590
Excess (deficiency) of cash available over disbursements
$118,800
$208,210
Financing
$0
$0
Ending Cash Balance
$118,800
$208,210
Part d--- Budgeted Income Statements for November and December
November
December
Sales
$330,000
$350,000
Less: Cost of Goods Sold (From part b)
$221,100
$234,500
Gross Profit
$108,900
$115,500
Other monthly expenses
$22,100
$22,100
Depreciation
$21,900
$21,900
Net Income
$64,900
$71,500
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Pls ask separate question for remaining parts.
Schedule of Expected Cash Collections
November
December
Sales
$330,000
$350,000
Schedule of Expected Cash Collections
Accounts Receivable
$83,900
(given)
November Sales
$231,000
(330,000*70%)
99000
(330,000*30%)
December Sales
245000
(350,000*70%)
Total Cash Collections
$314,900
$344,000
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