Question

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.

Answer 1

Answer:

Answer-a: November December $ 380,000 $ 400,000 Sales Schedule expected cash collections: Account receivable November sales December sales Total cash collections 82,800 285,000 95,000 300,000 395,000 367,800

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 $ 380,000 $ 400,000 273,600 288,000 106,400 112,000 21,000 21,000 20,800 20,800 64,600 70,200