Question

Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: o Sales are budgeted at $360,000 for November, $380,000 for December, and $350,000 for January. o Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible. o The cost of goods sold is 65% of sales. o The company desires an ending merchandise inventory equal to 60% of the cost of goods sold in the following month. o Payment for merchandise is made in the month following the purchase. o Other monthly expenses to be paid in cash are $21,900. o Monthly depreciation is $20,000. 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 Common stock 640,000 Retained earnings 416,400 Total liabilities and stockholders' equity $1,296,400 ~ Prepare a Schedule of Expected Cash Collections for November and December. ~ Prepare a Merchandise Purchases Budget for November and December. ~ Prepare Cash Budgets for November and December. ~ Prepare Budgeted Income Statements for November and December. ~ Prepare a Budgeted Balance Sheet for the end of December

show your work

Answer 1

Schedule of expected cash collections
	November	December	Total
Budgeted Sales	360000	380000	740000
Collections:
October sales	74000		74000
November Sales	270000	72000	342000
December Sales		285000	285000
Total Collections	344000	357000	701000
Receivable	90000	113000	113000
Merchandise Purchase Budget
	November	December	Total
Cost of goods sold (65%) of sales	234000	247000	481000
AdD: Desired ending inventory
(60% of the next month's cost)	148200	136500	136500
Cost of goods needed	382200	383500	617500
Less: Beginning inventory	140400	148200	140400
Budgeted Purchases	241800	235300	477100
Weldon Industrial Gac Corporation
Cash Budget
for the months of November and December
	November	December	Total
Beginning cash balance	16000	98100	16000
Add: Collections from customers	344000	357000	701000
Cash available for disbursements	360000	455100	717000
Less: Disbursements:
For merchandise purchases	240000	241800	481800
For operating expenses	21900	21900	43800
Total disbursements	261900	263700	525600
Ending cash balance	98100	191400	191400
Weldon Industrial Gac Corporation
Income statement
for the year ended December 31
Sales Revenue	740000
Cost of goods sold	481000
Gross profit	259000
Expenses:
Operating expenses	43800
Depreciation	40000
Total expenses	83800
Net operating income	175200
Weldon Industrial Gac Corporation
Balance Sheet
as at December 31
Assets
Cash		191400
Acounts Receivable		113000
Merchandise Inventory		136500
Plant and equipment	1566000
Depreciation	540000	1026000
Total Assets		1466900
Liabilities and equity
Accounts Payable		235300
Comon stock		640000
Retained earnings
Beginning balance	416400
Net income	175200	591600
Total liabilities and equity		1466900	0