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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

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