Welnor Industrial Gas Corporation supplies acetylene and other compressed gases

Question

Welnor Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: Sales are budgeted at $350,000 for November, $370,000 for December, and $360,000 for January Collections are expected to be 80% in the month of sale, 18% in the month following the sale, and 2% uncollectible The cost of goods sold is 72% of sales The company desires ending merchandise inventory to equal 80% 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 $21,300 Monthly depreciation is $16,300 . Ignore taxes Balance Sheet October 31 Assets Cash Accounts receivable (net of allowance for uncollectible accounts) Merchandise Inventory Property, plant and equipment (net of $661,000 accumulated depreciation) $ 22,300 82,300 201,600 1,170,000 Total assets $ 1,476,200 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings $ 199,300 870,000 406,900

Explanation / Answer

Welnor Industrial Gas Corporation Cash budget November December   Cash disbursement for merchandise 199300 260640   Other monthly cash expenses 21300 21300   Total cash disbursements 220600 281940   Cash balance, beginning 22300 164000   Add cash receipts 362300 359000   Total cash available 384600 523000   Less cash disbursements 220600 281940   Excess (deficiency) of cash available over disbursements 164000 241060   Financing 0 0   Cash balance, ending 164000 241060

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