Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry

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Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store’s operations are as follows:

• 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 purchases 60% of its merchandise in the month prior to the month of sale and 40% 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 $21,900.
• Monthly depreciation is $20,000.
• Ignore taxes.

Statement of Financial Position

October 31

Cash………………………………………………………………………………………  $16,000
Accounts receivable
   (net of allowance for uncollectible accounts)…………………………………………..   74,000
Inventory………………………………………………………………………………       140,000
Property, plant, and equipment………………………………………………………..    1,066,000
  (net of $500,000 accumulated depreciation)
Total assets…………………………………………………………………………….  $1,296,400

Liabilities and Stockholders’ Equity

Accounts payable…………………………………………………………………… $240,000
Common stock………………………………………………………………………   640,000
Retained earnings……………………………………………………………………   416,400
Total liabilities and 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.

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