Assignment:
Welon Industrial Gas Corporation supplies acetylene and other compressed gases to indusrty. 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 excepted 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 compnay purchases 60% of its merchandise in the month prior to the month of sale and 40% in the month of sale. Payment for the 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
Statement of Financial Position
October 31
Cash............................................................. $16,000
Accounts Receivable(net allowance for uncollectible accounts)..... 74,000
Inventory........................................................ 140,400
Property,Plant,Equipment(net of 500,000 accumlated Depreication..1,066,000
Total assets.................................................... 1,296,400
Liabilities & Stockholders Equity
Accounts Payable................................................240,000
Common Stock....................................................640,000
Retained Earnings............................................... 416,400
Total Liabilities & Stockholder Equity.................... 1,296,400
Required:
1) Prepare a Schedule of Expected Cash Collections for November and December.
2) Prepare a Merchandise Purchases Budget for November and December.
3) Prepare Cash Budgets for November and December.
4) Prepare Budget Income Statements for November and December.
5) How do you compute these budgets? Is there a standard form you use?