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 20,800 Accounts receivable 81,800 Merchandise inventory 214,200 994,000 Property, plant and equipment (net of $584,000 accumulated depreciation) Total assets $1,310,800 Liabilities and Stockholders' Equity Accounts payable $ 194,800 Common stock 490,000 626,000 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. d. Prepare Budgeted Income Statements for November and December. e. Prepare a Budgeted Balance Sheet for the end of 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 20,800 Accounts receivable 81,800 Merchandise inventory 214,200 994,000 Property, plant and equipment (net of $584,000 accumulated depreciation) Total assets $1,310,800 Liabilities and Stockholders' Equity Accounts payable $ 194,800 Common stock 490,000 626,000 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. d. Prepare Budgeted Income Statements for November and December. e. Prepare a Budgeted Balance Sheet for the end of December.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter7: The Master Budget And Flexible Budgeting
Section: Chapter Questions
Problem 1E: The sales department of Macro Manufacturing Co. has forecast sales for its single product to be...
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