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    Budgets - Welon Industrial Gas Corporation

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    Welon Industrial Gas Corporation supplies acetylene and other compressed gases to indusrty. 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 excepted 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 compnay purchases 60% of its merchandise in the month prior to the month of sale and 40% in the month of sale. Payment for the 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 allowance for uncollectible accounts).....74,000

    Inventory........................................................140,400
    Property,Plant,Equipment(net of 500,000 accumlated Depreication..1,066,000
    Total assets.....................................................1,296,400

    Liabilities & Stockholders Equity

    Accounts Payable................................................240,000
    Common Stock....................................................640,000
    Retained Earnings...............................................416,400
    Total Liabilities & Stockholder 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 Budget Income Statements for November and December.

    How do you compute these budgets? Is there a standard form you use?

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    https://brainmass.com/business/capital-budgeting/budgets-welon-industrial-gas-corporation-181439

    Solution Preview

    About the standard format for budgets: there really isn't a prescribed exact form but the general format (that can be customized for any business) ...

    Solution Summary

    Most of the solution is contained in four spreadsheets in Excel. As requested, the schedules are presented in good form to demonstrate how to compute the solutions for questions a, b, c and d. Also included is a general format for cash budgeting which can be adapted to most any type of business.

    $2.19

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