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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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  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.


  

Required:

  1. Prepare a Schedule of Expected Cash Collections for November and December.
  2. Prepare a Merchandise Purchases Budget for November and December.
  3. Prepare Cash Budgets for November and December.
  4. Prepare Budgeted Income Statements for November and December.
  5. Prepare a Budgeted Balance Sheet for the end of December. 
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