1) 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 merchandise inventory equal to 60% 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 $21,900.
- Monthly depreciation is $20,000.
- Ignore taxes.
Balance Sheet October 31
Assets
Cash 16,000
Accounts receivable(net of allowance for uncollectible accounts) 74,000
Merchandise Inventory 140,400
Property, plant and equipment (net 500,000 accumulated depreciation) 1,066,000
Total assets 1,296,400
Liabilities and Stockholders' Equity
Accounts payable 240,000
Common stock 640,000
Retained earnings 416,400
Total liabilities and stockholders' equity 1,296,400
Required:
a. Put together a Schedule of Expected Cash Collections for November and December.
b. Put together a Merchandise Purchases Budget for November and December.
c. Put together Cash Budgets for November and December.
d. Put together Budgeted Income Statements for November and December.
e. Put together a Budgeted Balance Sheet for the end of December.