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In: Accounting

Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's...

Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:

  • Sales are budgeted at $310,000 for November, $330,000 for December, and $320,000 for January.
  • Collections are expected to be 80% in the month of sale and 20% in the month following the sale.
  • The cost of goods sold is 70% of sales.
  • The company desires an ending merchandise inventory equal to 75% 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 $21,900.
  • Monthly depreciation is $21,700.
  • Ignore taxes.
Balance Sheet
October 31
Assets
Cash $ 22,700
Accounts receivable 83,700
Merchandise inventory 162,750
Property, plant and equipment (net of $601,000 accumulated depreciation) 1,011,000
Total assets $ 1,280,150
Liabilities and Stockholders' Equity
Accounts payable $ 196,700
Common stock 690,000
Retained earnings 393,450
Total liabilities and stockholders' equity $ 1,280,150

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.

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