Welnor Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: · Sales are budgeted at $320,000 for November, $340,000 for December, and $330,000 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 ending merchandise inventory to equal 80% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase. · Other monthly expenses to be paid in cash are $21,000. · Monthly depreciation is $16,000. · Ignore taxes. Welnor Corporation Balance Sheet October 31, 2011 ASSETS Cash $ 22,000 Accounts receivable 82,000 Merchandise inventory 166,400 Property, plant and equipment 1,170,000 Total assets $ 1,440,400 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 199,000 Common stock 840,000 Retained earnings 401,400 Total liabilities and stockholders' equity $ 1,440,000 Required:
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.