Question

.		3. Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: • Sales are budgeted at $360,000 for November, $380,000 for December, and $350,000 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 an ending merchandise inventory equal to 60% 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 $21,900. • Monthly depreciation is $20,000. • Ignore taxes. BALANCE SHEET OCTOBER 31 ASSET cash $ 16,000 accounts reciivable (net of allowance for uncollectible accounts) 74,000 Merchandise inventory 140,400 property, plant and equipment (net of $500,000 accumulated depreciation) 1,066,000 Total assets $1,296.400 Liabilities and stockholders Equity Account payable $ 240,000 common stock 640.000 Retained earnings 416.400   Total liabilities and stockholders equity $1,296.400 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.

Answer 1