Welnor Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:
o Sales are budgeted at $320,000 for November, $340,000 for December, and $330,000 for January.
o Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible.
o The cost of goods sold is 65% of sales.
o 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.
o Other monthly expenses to be paid in cash are $21,000.
o Monthly depreciation is $16,000.
o Ignore taxes.
Statement of Financial Position
October 31
Assets
Cash $22,000
Accounts receivable (net of allowance for uncollectible accounts) $82,000
Merchandise inventory $166,400
Property, plant and equipment (net of $658,000 accumulated depreciation) $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 $1,440,400
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.