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Question: master budgeteffluvium industrial gas corporation supplies acetylene and other compressed...

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Master Budget

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

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.

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