FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store's operations follow.
- Sales are budgeted at $300,000 for November, $320,000 for December, and $310,000 for January.
- Collections are expected to be 65% in the month of sale, 30% in the month following the sale, and 5% uncollectible. Beginning November
accounts receivable is $93,000. - The cost of goods sold is 75% of sales.
- The company purchases 70% of its compressed gases in the month prior to the month of sale and 30% in the month of sale. Payments for purchases are 40% in the month of purchase and 60% in the following month.
- Other monthly expenses to be paid in cash are $22,900.
- The Monthly
depreciation is $21,000. - The company has a desired ending cash balance of at least $35,000. It has an available line-of-credit for borrowing, if necessary, at 12% interest per annum.
- Assume that after the company acquired land and paid dividends in November, such that the beginning cash balance in December is $45,000.
1. What are Expected Cash Collections for December?
2. What are merchandise purchases for December?
3. What are disbursements related to merchandise purchases in December?
4. What is the ending cash balance in December given the beginning balance above?
5. Ignoring taxes, what is income for December?
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