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 $390,000 for November, $410,000 for December, and $400,000 for January Collections are expected to be 80% in the month of sale, 15% in the month following the sale, and 5% uncollectible ·The cost of goods sold is 73% 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 $20,700 Monthly depreciation is $15,700 Ignore taxes Balance Sheet October 31 Assets Cash Accounts receivable (net of allowance for uncollectible accounts) Merchandise Inventory Property, plant and equipment (net of $657,000 accumulated depreciation) $21,700 81,700 227,760 1,170,000 Total assets $1,501,160 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings $ 198,700 800,000 502,460 Total liabilities and stockholders' equity $1,501,160

Explanation / Answer

Point B November December Sales        390,000        410,000 COGS        284,700        299,300 Ending Merchandise Inventory at 80% of Next Month COGS        239,440        233,600 Opening Merchandise Inventory (as closing is 80% of next Month, opening will be 80% of current month)        227,760        239,440 Required Purchase        296,380        293,460 as you has asked more than 1 question, I had replied the first one, in case of any further requirement you may ask a particular question

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