Question: master budgeteffluvium industrial gas corporation supplies acetylene and other compressed...
Effluvium Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow:
• Sales are budgeted at $330,000 for November, $350,000 for December, and $340,000 for January.
• Collections are expected to be 70% in the month of sale and 30% in the month following the sale.
• The cost of goods sold is 79% of sales.
• The company desires an ending merchandise inventory equal to 70% 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 $20,300.
• Monthly depreciation is $20,100.
• Ignore taxes.
Balance Sheet October 31
Assets: Cash $21,100
Accounts receivable 82,100
Merchandise inventory 182,490
Property, plant and equipment (net of $587,000 accumulated depreciation) 997,000
Total assets $1,282,690
Liabilities and Stockholders' Equity
Accounts payable $195,100
Common stock 520,000
Retained earnings 567,590
Total liabilities and stockholders' equity $1,282,690
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.