Weller 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 $370,000 for January. • Collections are expected to be 75% in the month of sale and 25% in the month following the sale. • The cost of goods sold is 70% of sales. • The company desires an ending merchandise inventory equal to 85% 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 $20,000. • Monthly depreciation is $19,800. • Ignore taxes. Balance Sheet October 31 Assets Cash 2$ 20,800 81,800 214, 200 994,000 Accounts receivable Merchandise inventory Property, plant and equipment (net of $584,000 accumulated depreciation) Total assets $1,310,800 Liabilities and Stockholders' Equity Accounts payable $ 194,800 490,000 626,000 Common stock Retained earnings Total liabilities and stockholders' equity $1,310,800 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.
Weller 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 $370,000 for January. • Collections are expected to be 75% in the month of sale and 25% in the month following the sale. • The cost of goods sold is 70% of sales. • The company desires an ending merchandise inventory equal to 85% 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 $20,000. • Monthly depreciation is $19,800. • Ignore taxes. Balance Sheet October 31 Assets Cash 2$ 20,800 81,800 214, 200 994,000 Accounts receivable Merchandise inventory Property, plant and equipment (net of $584,000 accumulated depreciation) Total assets $1,310,800 Liabilities and Stockholders' Equity Accounts payable $ 194,800 490,000 626,000 Common stock Retained earnings Total liabilities and stockholders' equity $1,310,800 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.
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter22: Master Budget (master)
Section: Chapter Questions
Problem 1R: Ranger Industries has provided the following information at June 30: Other information: Average...
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