Question

)Weldon Industrial Gas Corporation supplies acetylene and other . The company sells each unit for S45. g the store's operations follow: a regardin compressed gases to industry. Data Budgeted Sales: October November December Jan Month Collections are expected to be 70% in the month of sale, 3 month following the sale 0% in the Sales in Units 30,000 25.000 40,000 30,000 - The A/R balance at September 30th will be collected in full in October The cost of the merchandise is $38 per unit. In addition to meeting the current month's sales demand, management wants to maintain and ending inventory balance of 10% of the next month's sales. The ending inventory balance at September 30th is 3,000 units. ½ paid in the month of Payment for merchandise is made as follows: the purchase, Minimum cash balance is $100,000. rate of 12%. paid the month following the purchase. .The A/P balance at September 30th will be paid in full in October. .A dividend was paid in October for $500,000. . The company has a line of credit for $500,000 at an annual interest Loans are taken out on first day of month borrowed and repaid at the end of the quarter with interest. Balance Sheet September 30 Cash S 100,000 250,000 114,000 866.400 Accounts receivable Inventory Property, plant and equipment (net of $200,000 accumulated depreciation. Total assets. $1.330.400 Liabilities and Stockholders' Equity Accounts payable. S 300,000 582,000 448.400 Retained earnings Total liabilities and stockholders' equity Required a. Prepare a Sales Budget for October, November, December, and Quarter. b. Prepare a Schedule of Expected Cash Collections for October, November, December, and Quarter. and Quarter December, and Quarter. c. Prepare a Merchandise Purchases Budget for October, November, December, d. Prepare a Schedule of Expected Cash Disbursements for October, November, e. Prepare Cash Budgets for October, November, December, and Quarter.

Answer 1

Weldon Industrial Gas Corporation Sales Budget For the Quarter Ended December 31 October November December uarter Sales in units Multiply by: Sales price per unit Total sales revenue 25,000 45 1,350,000 1,125,000 30,000 45 95,000 45 1,800,000 4,275,000 40,000 45 Weldon Industrial Gas Corporation Schedule of Expected Cash Collections For the Quarter Ended December 31 Workings November October November December uarter October December Collections on credit sales: $ 945,000 | $ 250,000 | $ 787,500 | $ 1,260,000 | $ 2,992,500 | ($1,350,000 * 70%)($1,125,000 * 70%) | ($1,800,000 * 70%) 405,000 | $ 70% of collected in the month of sale 30% of collected in the following month of sale | $ Total cash collections 337,500 | $ ($ 1,350,000 * 30%) | ($ 1,125,000 * 30%) 992,500 $ 1,195,000 $ 1,192,500 1,597,500 3,985,000

Weldon Industrial Gas Corporation Merchandise Purchase Budget For the Quarter Ended December 31 October November December uarter Janua Sales in Units Plus: Desired ending inventory of DM Total needs Less: Beginning inventory of DM Budgeted Merchandise purchase in units Multiplv by: Cost of merchandise per unit Merchandise Purchase Budget 25,000 4,000 29,000 2,500 26,500 38.00 30,000 2,500 32,500 3,000 29,500 $38.00 95,000 3,000 98,000 3,000 95,000 38.00 38.00 $ 1,121,000 1,007,000 $ 1,482,000 3,610,000 40,000 3,000 43,000 4,000 39,000 30000 (10% of next quarters sales) (10% of current quarters sales) Weldon Industrial Gas Corporation Schedule of Expected Cash Disbursements For the Quarter Ended December 31 Workings November October November December uarter $ October December 560,500 | $ 300,000 S 560,500 $ 503,500 $ 1,364,000 860,5001,064,0 503,500 | $ 741,000 | $ 1,805,000 | ($ 1,121,000 * 50%)($ 1,007,000 * 50%) | ($ 1,482,000 * 50%) ($ 1,121,000 * 50%) | ($ 1,007,000 * 50%) 50% 50% of previous month DM purchases Total cash payments of current month DM purchases 000 $ 1,244,500 3,169,000

Weldon Industrial Gas Corporation Cash Budget October November December Quarter $ 100,000 $ 100,000 $ 265,500 100,000 $1,195,000 $ 1,192,500 $ 1,597,500 3,985,000 refer answer b $ 1,295,000 1,292,500 1,863,000 4,085,000 Beginning cash balance Total receipts Subtotal Less: Cash disbursements $ 860,500 $ 1,064,000 1,244,500 3,169,000 refer answer d S 500,000 S $ 1,360,500 1,064,000 1,244,500 3,669,000 s (65,500) 228,500 $ 6 Payments for purchase of echandise S500,000 Dividend Total cash disbursements Excess or (deficiency) Financing: Borrowings Repayments Interest on Borrowings Total Financin Ending Cash balance 618,500 416,000 $ 165,500 $37,000$ S 202,500 (202,500) (202,500) $ (5,705)$ (5,705) $ 165,500 37,000 (208,205) (5,705) $ 100,000 $ 265,500 410,295 410,295 Interest on Borrowings $4,965 740 $5,705 For Borrowings made on 1st October For Borrowings made on 1st Novomber Total interest on borrowings