Weller Industrial Gas Corporation supplies acetylene and other compressed gases
ID: 2520249 • Letter: W
Question
Weller 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 and 20% in the month following the sale.
The cost of goods sold is 69% of sales.
The company desires an ending merchandise inventory equal to 70% 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 $22,300.
Monthly depreciation is $22,100.
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.
Balance SheetOctober 31 Assets Cash $ 23,100 Accounts receivable 84,100 Merchandise inventory 169,050 Property, plant and equipment (net of $605,000 accumulated depreciation) 1,015,000 Total assets $ 1,291,250 Liabilities and Stockholders' Equity Accounts payable $ 197,100 Common stock 950,000 Retained earnings 144,150 Total liabilities and stockholders' equity $ 1,291,250
Explanation / Answer
Solution:
Part 1 --- Expected Cash Collections
Schedule of Expected Cash Collections for November and December
November
December
Accounts Receivable, beginning
$84,100
November Sales
$280,000
$70,000
December Sales
288000
Total Expected Cash Collections
$364,100
$358,000
Part 2 – merchandise Purchase Budget
November
December
January
Cost of Goods Sold (Sales * 69%)
$241,500
$255,300
$248,400
Plus: Desired Ending Inventory
$178,710
$173,880
Total Needs
$420,210
$429,180
Less: Estimated Beginning Inventory
$169,050
$178,710
Merchandise to be purchased
$251,160
$250,470
Part 3 – Cash Budget
November
December
Beginning Cash Balance
$23,100
$167,800
Add: Cash Collection from Customers
$364,100
$358,000
Total Cash Available
$387,200
$525,800
Less: Cash disbursements
for merchandise purchases
$197,100
$251,160
Other Expenses
$22,300
$22,300
Total Cash Disbursements
$219,400
$273,460
Ending Cash Balance
$167,800
$252,340
Part 4 – Income Statement
November
December
Sales Revenue
$350,000
$370,000
Cost of Goods Sold
$241,500
$255,300
Gross Profit
$108,500
$114,700
Other Expense
$22,300
$22,300
Depreciation
$22,100
$22,100
Operating Profit
$64,100
$70,300
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Pls ask separate question for remaining parts.
Schedule of Expected Cash Collections for November and December
November
December
Accounts Receivable, beginning
$84,100
November Sales
$280,000
$70,000
December Sales
288000
Total Expected Cash Collections
$364,100
$358,000
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