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.
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.
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.
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. d. Prepare Budgeted Income Statements for November and December. e. Prepare a Budgeted Balance Sheet for the end of December.
Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.
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