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Weller Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:
Sales are budgeted at $380,000 for November, $400,000 for December, and $390,000 for January.
- Collections are expected to be 75% in the month of sale and 25% in the month following the sale.
- The cost of goods sold is 72% of sales.
- The company desires an ending merchandise inventory equal to 85% 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 $21,000.
- Monthly depreciation is $20,800.
- Ignore taxes.
| Balance Sheet October 31 |
| Assets | | | | | | |
| Cash | $ | 21,800 | | | | |
| Accounts receivable | | 82,800 | | | | |
| Merchandise inventory | | 232,560 | | | | |
| Property, plant and equipment (net of $608,000 accumulated depreciation) | | 1,018,000 | | | | |
| Total assets | $ | 1,355,160 | | | | |
| | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | |
| Accounts payable | $ | 195,800 | | | | |
| Common stock | | 590,000 | | | | |
| Retained earnings | | 569,360 | | | | |
| Total liabilities and stockholders' equity | $ | 1,355,160 | | | | |
| |
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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