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 $350,000 for November, $370,000 for
December, and $360,000 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 69% 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 $20,100.
- Monthly depreciation is $19,900.
- Ignore taxes.
Balance Sheet
October 31 |
Assets |
|
|
Cash |
$ |
20,900 |
Accounts receivable |
|
81,900 |
Merchandise inventory |
|
193,200 |
Property, plant and equipment (net of $585,000 accumulated
depreciation) |
|
995,000 |
Total assets |
$ |
1,291,000 |
|
|
|
Liabilities and Stockholders' Equity |
|
|
Accounts payable |
$ |
194,900 |
Common stock |
|
500,000 |
Retained earnings |
|
596,100 |
Total liabilities and stockholders' equity |
$ |
1,291,000 |
|
Required:
a. Prepare a Schedule of Expected Cash Collections for
November and December.
|
|
|
November |
December |
Sales |
|
|
Schedule of Expected Cash
Collections |
|
|
Accounts receivable |
|
|
November sales |
|
|
December sales |
|
|
Total cash collections |
$0 |
$0 |
|
b. Prepare a Merchandise Purchases Budget for November
and December.
|
|
|
November |
December |
Budgeted cost of goods sold |
|
|
|
|
|
Total needs |
0 |
0 |
|
|
|
Required purchases |
$0 |
$0 |
|
c. Prepare Cash Budgets for November and
December.
|
|
|
November |
December |
Cash disbursements for merchandise |
|
|
Other monthly cash expenses |
|
|
Total cash disbursements |
$0 |
$0 |
|
Beginning cash balance |
|
|
Add cash receipts |
|
|
Total cash available |
0 |
0 |
Less cash disbursements |
|
|
Excess (deficiency) of cash available
over disbursements |
0 |
0 |
Financing |
|
|
Ending cash balance |
$0 |
$0 |
|
d. Prepare Budgeted Income Statements for November and
December.
|
|
|
November |
December |
Sales |
|
|
Cost of goods sold |
|
|
|
0 |
0 |
Other monthly expenses |
|
|
Depreciation |
|
|
|
$0 |
$0 |
|
e. Prepare a Budgeted Balance Sheet for the end of
December
|
|
Balance Sheet |
December 31 |
Assets |
|
Cash |
|
Accounts receivable |
|
Inventory |
|
Property, plant and equipment (net of
accumulated depreciation) |
|
Total assets |
$0 |
|
|
Liabilities and Stockholders'
Equity |
|
Accounts payable |
|
Common stock |
|
Retained earnings |
|
Total liabilities and
stockholders' equity |
$0 |
|