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 operatio ns follow: Sales are budgeted at $350,000 for November, $370,000 for December, and S360,000 for January . Collections are expected to be 75% in the month of sale, 22% in the month following the sale, and 3% uncollectible ·The cost of goods sold is 74% 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 $20,600 Monthly depreciation is $15,600 · Ignore taxes Balance Sheet October 31 Assets Cash Accounts receivable (net of allowance for uncollectible accounts) Merchandise Inventory Property, plant and equipment (net of $656,000 accumulated depreciation) $ 21,600 81,600 181,300 1,170,000 Total assets $1,454,500 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings $ 198,600 790,000 465,900 Total liabilities and stockholders' equity $1,454,500

Explanation / Answer

Required Budgets are as prepared below:

Weldon Industrial gas Corporation Schedule of expected Cash collections Month Particulars November December January Sales 350,000 370,000 360,000 Schedule of expected Cash collections Account Receivable 81,600 November sales 262,500 77,000 December sales 277,500 81,400 January sales 270000 Total collections 344,100 354,500 351,400 Weldon Industrial gas Corporation Merchandise Purchase Budget Month Particulars November December January Cost of Goods sold (74% of sales) 259,000 273,800 266,400 Add: Ending Inventory (70% of next month COGS) 191,660 186,480 0 Total needs 450,660 460,280 266,400 Less: Beginning Inventory 181,300 191,660 186,480 Required Purchase 269,360 268,620 Weldon Industrial gas Corporation Schedule of expected Cash payments Month Particulars November December January Beginning Accounts Payable (a) $198,600 November Purchases $269,360 December Purchases $268,620 Total payments $198,600 $269,360 $268,620 Weldon Industrial gas Corporation Cash Budget Month Particulars November December Cash disbursement for merchandise 198,600 269,360 Other monthly cash expense $20,600 $20,600 Total cash disbursement $219,200 $289,960 Cash balance, beginning 21,600 146,500 Add: cash receipts $344,100 $354,500 Total cash available 365,700 501,000 Less cash disbursement 219,200 289,960 Excess (deficiency) of cash available over disbursements 146,500 211,040 financing 0 0 cash balance ending 146,500 211,040 Weldon Industrial gas Corporation Budgeted Income Statement Particulars November December Sales 350,000 370,000 Less: Cost of goods sold (74% of sales) 259,000 273,800 Gross margin 91,000 96,200 Less: Selling and administartive exp Depreciation 15,600 15,600 Other monthly expenses 20,600 20,600 Bad Debt Expense (3%) 10,500 11,100 Net Income 44,300 48,900 Weldon Industrial gas Corporation Budgeted balance Sheet Dec-31 Assets Cash 211,040 Accounts Receivable (net of allowance) 81,400 Merchandise Inventory 186,480 Property and equipment Net of accumulated dep 1,138,800 Total assets 1,617,720 Liabilities and Stockholders' Equity Accounts Payable purchases 268,620 Common Stock 790,000 Retained earnings (465,900+44,300+48,900) 559,100 Total liabilities and stockholders' equity 1,617,720

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

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