Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow: • Sales are budgeted at $360,000 for November, $380,000 for December, and $350,000 for January. • Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible. • The cost of goods sold is 65% of sales. • The company desires an ending merchandise inventory equal to 60% 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 $21,900. • Monthly depreciation is $20,000. • Ignore taxes. Balance Sheet October 31 Assets: Cash $16,000 Accounts receivable (net of allowances for uncollectable accounts $74,000 Merchandise inventory $140,400 Property, plant and equipment (net of $500,000 accumulated depreciation) $1,066,000 Total Assets: $1,296,400 Liabilities and Stockholders’ Equity: Accounts payable $240,000 Common stock $640,000 Retained earnings $416,000 Total liabilities and stockholders’ equity: $1,296,400 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.
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.
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Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:
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