I know its a time consuming projest, but please help me, ill rate you all A+ 1.
ID: 2378672 • Letter: I
Question
I know its a time consuming projest, but please help me, ill rate you all A+ 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. 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.Explanation / Answer
a. Prepare a Schedule of Expected Cash Collections for November and December. Schedule of Expected cash collections ------------------------------------------------ November December Sales 390,000 370,000 ______________________________________________________ Accounts Receivables 71,000 November Sales 390,000x90% 351,000 390,000x5% 19,500 December Sales 370,000x90% 333,000 ______________________________________________________ Total cash collection 422,000 352,500 ====================================================== b. Prepare a Merchandise Purchases Budget for November and December. Merchandise Purchase Budget ----------------------------------- November December Cost of goods sold 234,000 222,000 390,000 x 60% 370,000 x 60% ______________________________________________________ November Sales 234,000x30% 70,200 December Sales 222,000x70% 155,400 222,000x30% 66,600 January sales 380,000x60%x70% 159,600 ______________________________________________________ Total Purchases 225,600 226,200 Total payments to suppliers 232,000 225,600 ====================================================== c. Prepare Cash Budgets for November and December. Cash Budget ----------------- November December Cash receipts 422,000 352,500 ______________________________________________________ Cash disbursement: Payments to suppliers 232,000 225,600 Other monthly expenses 21,800 21,800 ______________________________________________________ Total cash disbursement 253,800 247,400 ====================================================== Excess/(deficiency) of cash over disbursement 168,200 105,100 Cash at the beginning 25,000 193,200 ________________________________________________________ Cash at the end 193,200 298,300 ======================================================== d. Prepare Budgeted Income Statements for November and December. November December Sales 390,000 370,000 ______________________________________________________ Bad debts 5% of sales 19,500 18,500 Cost of goods sold 234,000 222,000 ______________________________________________________ 253,500 240,500 ______________________________________________________ Gross profit 136,500 129,500 ______________________________________________________ Other expenses 21,800 21,800 Depreciation 18,000 18,000 ______________________________________________________ 39,800 39,800 ______________________________________________________ Net operating Income 96,700 89,700 ______________________________________________________ e. Prepare a Budgeted Balance Sheet for the end of December. Statement of Financial Position as on December 31 ------------------------------------------------------------- Assets : Cash 298,300 Accounts receivables 370,000 x 5% 18,500 (net of allowance for uncollectible accounts) Inventory 159,600 Prpoerty, Plant and equipment 1,052,000 (net of $540,000 accumulated depreciation) __________ Total Assets 1,528,400 ========== Liabilities and Shareholders' equity: Accounts payables 226,200 Common Stock 700,000 Retained Earnings 602,200 __________ Total liabilities and shareholders' equity 1,528,400 ==========