Welnor Industrial Gas Corporation supplies acetylene and other compressed gases
ID: 2465289 • Letter: W
Question
Welnor 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 $390,000 for January.
Collections are expected to be 75% in the month of sale, 21% in the month following the sale, and 4% uncollectible.
The company desires ending merchandise inventory to equal 85% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
Required:
Prepare a Schedule of Expected Cash Collections for November and December. (Omit the "$" sign in your response.)
Prepare a Merchandise Purchases Budget for November and December. (Input all amounts as positive values. Do not round intermediate calculations. Omit the "$" sign in your response.)
Prepare Cash Budgets for November and December. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.)
Prepare Budgeted Income Statements for November and December. (Input all amounts as positive values. Omit the "$" sign in your response.)
Prepare a Budgeted Balance Sheet for the end of December. (Be sure to enter your answers in the order of liquidity. Input all amounts as positive values. Omit the "$" sign in your response.)
Welnor Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:
Explanation / Answer
Solution :
November
December
January
sales
380000
400000
390000
a.CASH COLLECTION
November
December
from account receivable
81800
from November
285000
79800
(380000*.75)
(380000*.21)
from December
300000
(400000*.75)
total cash collection
366800
379800
b.Merchandise purchase budget
November
December
Budgeted COGS
273600
288000
(380000*.72)
(400000*.72)
Add : desired ending inventory
244800
238680
(288000*.85)
(280800*.85)
Total needs
518400
526680
Less : Begining inventory
232560
244800
Required purchase
285840
281880
c. Cash budget
November
December
Cash disbursements for merchandise
198800
285840
Other monthly cash expenses
20800
20800
Total cash disbursements
219600
306640
Cash balance, beginning
21800
169000
Add cash receipts
366800
379800
Total cash available
388600
548800
Less cash disbursement
-219600
-306640
Excess (deficiency) of cash available
169000
242160
over disbursements
Financing
0
0
Cash balance, ending
169000
242160
d.Income statment
SALES
780000
LESS : COGS
-561600
GROSS PROFIT
218400
Less : BAD DEBTS EXPESNE (380000+400000)*4%
-31200
LESS: OTHER EXPENSE
-73200
NET PROFIT
114000
e.BALANCE SHEET
$
ASSTES
CASH
242160
ACCOUNT RECEIVABLE (400000*21%)
84000
INVENTORY
238680
PLANT,EQUIPMENT AND DEP (1170000-31600)
1138400
TOTAL ASSET
1703240
LIABILITIES & STOCKHOLDER EQUITY
ACCOUNTS PAYABLE
281880
COMMON STOCK
810000
RETAINED EARNING (497360+114000)
611360
TOTAL LIABILITIES & STOCKHOLDER EQUITY
1703240
November
December
January
sales
380000
400000
390000
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