Weldon Industrial Gas Corporation supplies acetylene and other compressed gases
ID: 2576589 • Letter: W
Question
Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:
• Sales are budgeted at $360,000 for November, $380,000 for December, and $350,000 for January.
• Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires an ending merchandise inventory equal to 60% 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 $61,900.
• Monthly depreciation is $20,000.
• Equipment purchased in December of $55,000.
• Dividend paid in December of $75,000.
• Financing: If cash is over $50,000 at the end of any month, pay back loan in increments of $5,000. If cash is under 15,000 at the end of any month, borrow in $5,000 increments.
• Ignore taxes.
Balance Sheet
October 31
Assets:
Cash $ 16,000
Accounts receivable (net of allowance for uncollectible accounts) 74,000
Merchandise inventory 140,400
Property, plant and equipment (net of $500,000 accumulated depreciation) 1,066,000
Total assets $1,296,400
Liabilities and Stockholders’ Equity:
Accounts payable $ 240,000
Notes payable 115,000
e. Prepare a Budgeted Balance Sheet for the end of December
Balance Sheet
December 31
Assets:
Cash $
Accounts receivable (net of allowance for uncollectible accounts)
Merchandise inventory
Property, plant and equipment (net of $540,000 accumulated depreciation) .
Total assets $ .
Liabilities and Stockholders’ Equity:
Accounts payable $
Notes payable
Common stock
Retained earnings .
Total liabilities and stockholders’ equity $
Common stock 640,000
Retained earnings 301,400
Total liabilities and stockholders’ equity $1,296,400
Explanation / Answer
WELDON INDUSTRIAL GAS CORPORATION: Total SALES BUDGET: November December Nov-Dec January Sales in $ 360000 380000 740000 350000 COLLECTIONS FROM RECEIVABLES: From current month's sales (75%) 270000 285000 555000 From sales of last month (20%) 74000 72000 146000 Total monthly collections from receivables 344000 357000 701000 PURCHASE BUDGET: Cost of goods sold 234000 247000 481000 227500 Desired ending inventory 148200 136500 136500 Total needs 382200 383500 617500 280000 Beginning inventory 140400 148200 140400 Required purchases 241800 235300 477100 CASH DISBURSEMENTS FOR PURCHASES: For the previous month's purchases 240000 241800 481800 Total monthly payments for purchases 240000 241800 481800 CASH BUDGET: Beginning balance of cash 16000 53100 16000 Receipts of cash: Collections from receivables 344000 357000 701000 Total cash available 360000 410100 717000 Cash disbursements: Payments for purchases 240000 241800 481800 Monthly expenses 61900 61900 123800 Purchase of equipment 0 55000 55000 Dividends 0 75000 75000 Total disbursements 301900 433700 735600 Cash surplus/(deficit) 58100 -23600 -18600 Financing: Borrowing 0 25000 25000 Repayment 5000 0 5000 Payment of interest 0 0 0 Total financing -5000 25000 20000 Ending cash balance 53100 1400 1400 BUDGETED INCOME STATEMENT Sales revenue (740000*95%) 703000 Cost of goods sold 481000 Gross profit 222000 Operating expenses: Depreciation 40000 Other expenses 123800 163800 Net income 58200 BALANCE SHEET ASSETS Cash 1400 Receivables (net of allowance) 76000 Inventory 136500 Equipment (net of depreciation of $40000) 1081000 Total assets 1294900 LIABILITIES & STOCKHOLDERS' EQUITY Accounts payable 235300 Notes payable 135000 Common stock 640000 Retained earnings 284600 1294900
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.