Cash flow Budget
Asked Jul 13, 2008, 12:08 PM
Weldon 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 $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.
Statement of Financial Position
Cash $ 16,000
(net of allowance for uncollectible accounts) 74,000
Property, plant and equipment
(net of $500,000 accumulated depreciation) 1,066,000
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
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.