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?
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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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