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 $540,000 for November, $550,000 for December, and $540,000 for January.

Collections are expected to be 73% in the month of sale, 25% in the month following the sale, and 2% uncollectible.

The cost of goods sold is 60% 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 $24,500.

Ignore taxes.

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.

Welnor Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:

Explanation / Answer

A.Schedule of expected cash collections for the month of november and december

Current Month(73%)

B. Purchase Bodget

Closing Stock(80% of next month cogs)

C. Cash Budget

Cash collections

D. Budgeted Income Statement

November December

Sales 5,40,000 5,50,000

Cost of good sold (3.24,000) (3,30,000)

Gross profit 2,16,000 2,20,000

Expenses (24,500) (23,500)

Net income 1,91,500 1,96,500

E. Budgeted Balance Sheet

Liabilities

Equity

less: Net Income (1,96,500)

Prov for bad debts(2% of sales) 11,000

Assets

Account Receivables(5,50,000-4,10,500) 1,48,500

November December January Sales 5,40,000 5,50,000 5,40,000

Current Month(73%)

3,94,200 4,01,500 3,94,000 Previous Month(25%) ---- 1,35,000 1,37,500 Total Sales 3,94,000 5,36,500 5,31,500

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.