Question

Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's...

Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:

Sales are budgeted at $380,000 for November, $400,000 for December, and $390,000 for January.

  • Collections are expected to be 75% in the month of sale and 25% in the month following the sale.
  • The cost of goods sold is 72% of sales.
  • The company desires an ending merchandise inventory equal to 85% 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 $21,000.
  • Monthly depreciation is $20,800.
  • Ignore taxes.

Balance Sheet
October 31

Assets

Cash

$

21,800

Accounts receivable

82,800

Merchandise inventory

232,560

Property, plant and equipment (net of $608,000 accumulated depreciation)

1,018,000

Total assets

$

1,355,160

Liabilities and Stockholders' Equity

Accounts payable

$

195,800

Common stock

590,000

Retained earnings

569,360

Total liabilities and stockholders' equity

$

1,355,160

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.

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Answer #1

Answer:

Answer-a: November December $ 380,000 $ 400,000 Sales Schedule expected cash collections: Account receivable November sales D

Please provide purchase information. It is missing in the question. Answer for b, c & e can be given only after getting purchase information.

Answer-d: Sales Cost of goods sold Gross margin Other monthly expense Depreciation Net operating income November December $ 3

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