1. Weltin Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: • Sales are budgeted at $390,000 for November, $370,000 for December, and $380,000 for January • Collections are expected to be 90% in the month of sale, 5% in the month following the sale, and 5% uncollectible. • The cost of goods sold is 60% of sales • The company purchases 70% of its merchandise in the month prior to the month of sale and 30% in the month of sale. Payment for merchandise is made in the month following the purchase • Other monthly expenses to be paid in cash are $21,800! • Monthly depreciation is $18,000 Ignore taxes. Statement of Financial Position October 31 Assets Cash... 2$ 25.000 Accounts receivable (net of allowance for uncollectible accounts) 71,000 Inventory.. Property, plant and equipment (net of $504.000 accumulated depreciation)... 163.800 1.088.000 Total assets.......... $1,347.800 Liabilities and Stockholders Equity Accounts payable . $ 232.000 Common stock 700,000 ned earnings. Total liabilities and stockholders' equity... $1,347,800 Re 415.800 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.
1. Weltin Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: • Sales are budgeted at $390,000 for November, $370,000 for December, and $380,000 for January • Collections are expected to be 90% in the month of sale, 5% in the month following the sale, and 5% uncollectible. • The cost of goods sold is 60% of sales • The company purchases 70% of its merchandise in the month prior to the month of sale and 30% in the month of sale. Payment for merchandise is made in the month following the purchase • Other monthly expenses to be paid in cash are $21,800! • Monthly depreciation is $18,000 Ignore taxes. Statement of Financial Position October 31 Assets Cash... 2$ 25.000 Accounts receivable (net of allowance for uncollectible accounts) 71,000 Inventory.. Property, plant and equipment (net of $504.000 accumulated depreciation)... 163.800 1.088.000 Total assets.......... $1,347.800 Liabilities and Stockholders Equity Accounts payable . $ 232.000 Common stock 700,000 ned earnings. Total liabilities and stockholders' equity... $1,347,800 Re 415.800 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:1. Weltin Industrial Gas Corporation supplies acetylene and other compressed gases to industry.
Data regarding the store's operations follow:
• Sales are budgeted at $390,000 for November, $370,000 for December, and $380,000 for
January
• Collections are expected to be 90% in the month of sale, 5% in the month following the
sale, and 5% uncollectible.
• The cost of goods sold is 60% of sales.
• The company purchases 70% of its merchandise in the month prior to the month of sale
and 30% in the month of sale. Payment for merchandise is made in the month following
the purchase
• Other monthly expenses to be paid in cash are $21,800!
• Monthly depreciation is $18,000,
• Ignore taxes.
Statement of Financial Position
October 31
Assets
Cash...
$25,000
Accounts receivable (net of allowance for
uncollectible accounts).
Inventory.
Property, plant and equipment (net of
$504,000 accumulated depreciation)...
71,000
163,800
1.088,000
$1.347.800
Total assets
Liabilities and Stockholders Equity
Accounts payable
$ 232,000
Common stock
700,000
Retained earnings...
Total liabilities and stockholders' equity... $1.347,800
415.800
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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