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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 $18,000 Ignore taxes. Statement of Financial Position October 31 Assets Cash... 2$ 25.000 Accounts receivable (net of allowance for uncollectible accounts) 71,000 Inventory.. Property, plant and equipment (net of $504.000 accumulated depreciation)... 163.800 1.088.000 Total assets.......... $1,347.800 Liabilities and Stockholders Equity Accounts payable . $ 232.000 Common stock 700,000 ned earnings. Total liabilities and stockholders' equity... $1,347,800 Re 415.800 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.

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 $18,000 Ignore taxes. Statement of Financial Position October 31 Assets Cash... 2$ 25.000 Accounts receivable (net of allowance for uncollectible accounts) 71,000 Inventory.. Property, plant and equipment (net of $504.000 accumulated depreciation)... 163.800 1.088.000 Total assets.......... $1,347.800 Liabilities and Stockholders Equity Accounts payable . $ 232.000 Common stock 700,000 ned earnings. Total liabilities and stockholders' equity... $1,347,800 Re 415.800 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.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...
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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. Statement of Financial Position October 31 Assets Cash... $25,000 Accounts receivable (net of allowance for uncollectible accounts). Inventory. Property, plant and equipment (net of $504,000 accumulated depreciation)... 71,000 163,800 1.088,000 $1.347.800 Total assets Liabilities and Stockholders Equity Accounts payable $ 232,000 Common stock 700,000 Retained earnings... Total liabilities and stockholders' equity... $1.347,800 415.800 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. d) Prepare Budgeted Income Statements for November and December. e) Prepare a Budgeted Balance Sheet for the end of December.
Transcribed Image Text: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. Statement of Financial Position October 31 Assets Cash... $25,000 Accounts receivable (net of allowance for uncollectible accounts). Inventory. Property, plant and equipment (net of $504,000 accumulated depreciation)... 71,000 163,800 1.088,000 $1.347.800 Total assets Liabilities and Stockholders Equity Accounts payable $ 232,000 Common stock 700,000 Retained earnings... Total liabilities and stockholders' equity... $1.347,800 415.800 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. d) Prepare Budgeted Income Statements for November and December. e) Prepare a Budgeted Balance Sheet for the end of December.
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