Weller Industrial Gas Corporation supplies acetylene and other compressed gases

Question

Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: Sales are budgeted at $340,000 for November, $360,000 for December, and $350,000 for January Collections are expected to be 75% in the month of sale and 25% in the month following the sale The cost of goods sold is 68% of sales The company desires an ending merchandise inventory equal to 80% 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 $22,200. Monthly depreciation is $22,000 .Ignore taxes Balance Sheet October 31 Assets Cash Accounts receivable Merchandise inventory Property, plant and equipment (net of $684,000 accumulated depreciation) Total assets $ 23,000 84,000 184,960 1,014,000 $1,305,960 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $ 197,000 940,000 168,960 $1,305,960 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

Explanation / Answer

a. Schedule of Expected Cash Collections:

b. Merchandise Purchases Budget:

c. Cash Budget

For November and December

d. Budgeted Income Statement

For the two months ended December 31

e. Budgeted Balance Sheet

December 31

November December Total Collections of Sales of October 84,000 0 84,000 November 255,000 85,000 340,000 December 0 270,000 270,000 Totals 339,000 355,000 694,000

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