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 Rec.(allowances for uncollected accts) 74,000 mechandise inventory 140,400 Property, plants & equipment (500,000 accumulated depreciation) 1,066,000 TOTAL ASSETS 1,296,400 Liabilities & stockholders equity Accts payable 240,000 Common stock 640,000 reatined earnings 416,000 TOTAL LIABILITIES & 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.
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.
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
• Ignore taxes.
| ASSETS | |
| Cash | 16,000 |
| Accounts Rec.(allowances for uncollected accts) | 74,000 |
| mechandise inventory | 140,400 |
| Property, plants & equipment (500,000 |
1,066,000 |
| TOTAL ASSETS | 1,296,400 |
| Liabilities & |
|
| Accts payable | 240,000 |
| Common stock | 640,000 |
| reatined earnings | 416,000 |
| TOTAL LIABILITIES & 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
d. Prepare
e. Prepare a Budgeted Balance Sheet for the end of December.
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