X Question Use the following infomation to answer Questions 4 through 7 Weldon I
ID: 2599875 • Letter: X
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X Question Use the following infomation to answer Questions 4 through 7 Weldon Industrial Gas Corporation supplies compressed gases to other companies. Data reganding Weldon's operations follow Sales are all on account, and they 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 cost of goods sold is 76% of sales. -The company desires an ending merchandise inventory equal to 80% of the cost of goods sold in the following month. Merchandise is bought on account, and payment for merchandise is made in the month following the purchase. Other monthly expenses to be paid in cash are $20,400 . Monthly depreciation is $15,400. * Ignore taxes. 4. How much are Weldon's total cash collections in December? A. $306,000 B. $297.200 S301,600 $292,800 None of the above . How much are Weldon's total cash disbursements in December for merchandise purchase? A. $234,080 B. $240,160 C. $237,120 D. $231,040 E. None of the aboveExplanation / Answer
4.
Answer = $306,000
In $
December sales ($320,000 * 75%)
240,000
November ($300,000 * 22%)
66,000
Total
306,000
Total Collection in the month of December = $306,000
5.
Answer = $240,160
It is mentioned that the company purchases 80% of COGS of current month in previous month and it is on account and payment is made next month i.e. current month.
And remaining 20% in the next month.
COGS of November = $300,000*76% = $228,000
COGS of December = $320,000*76% = $243,200
November payment made in December = $228,000*20% = $45,600
December payment made in December = $243,200*80% = $194,560
Total payment done in December = $240,160 ($45,600 + $194,560)
In $
December sales ($320,000 * 75%)
240,000
November ($300,000 * 22%)
66,000
Total
306,000
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