Weldon Industrial Gas Corporation supplies acetylene and other compressed gases

Question

Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: Sales are budgeted at $370,000 for November, $390,000 for December, and $380,000 for January ·Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and 3% uncollectible · The cost of goods sold is 71% 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 $20,900. Monthly depreciation is $15,900 Ignore taxes Balance Sheet October 31 Assets Cash Accounts receivable (net of allowance for uncollectible accounts) Merchandise Inventory Property, plant and equipment (net of $671,000 accumulated depreciation) $ 21,900 81,900 210,160 1,170,000 Total assets $1,483,960 Liabilities and Stockholders' Equity Accounts payable Common stock $ 198,900 820,000 465,060 Retained earnings Total liabilities and stockholders' equity $1,483,960

Explanation / Answer

Weldon balance sheet is as prepared below:

Working Notes:

Weldon Industrial gas Corporation Budgeted balance Sheet Dec-31 Assets Cash 259,940 Accounts Receivable (net of allowance) 66,300 Merchandise Inventory 215,840 Property and equipment Net of accumulated dep 1,138,200 Total assets 1,680,280 Liabilities and Stockholders' Equity Accounts Payable purchases 271,220 Common Stock 820,000 Retained earnings (465,060+64,600+ 59,400) 589,060 Total liabilities and stockholders' equity 1,680,280

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