Welnor Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:
| • |
Sales are budgeted at $330,000 for November, $350,000 for December, and $340,000 for January.
|
| • |
Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.
|
| • |
The cost of goods sold is 79% of sales. |
| • |
The company desires ending merchandise inventory to equal 70% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
|
| • |
Other monthly expenses to be paid in cash are $20,100. |
| • |
Monthly depreciation is $15,100. |
| • |
Ignore taxes. |
Statement of Financial Position
October 31 |
| Assets |
| Cash |
$ |
21,100 |
| Accounts receivable (net of allowance for uncollectible accounts) |
|
81,100 |
| Merchandise Inventory |
|
182,490 |
| Property, plant and equipment (net of $651,000 accumulated depreciation) |
|
1,170,000 |
|
|
|
| Total assets |
$ |
1,454,690 |
|
|
|
| Liabilities and Stockholders' Equity |
| Accounts payable |
$ |
198,100 |
| Common stock |
|
740,000 |
| Retained earnings |
|
516,590 |
|
|
|
| Total liabilities and stockholders' equity |
$ |
1,454,690 |
|
|
|
|
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