Bledso Supply Corporation manufactures and sells cotton gauze. Expected sales of gauze (in boxes) for upcoming months are as follows:

124. Bledso Supply Corporation manufactures and sells cotton gauze. Expected sales of gauze (in boxes) for upcoming months are as follows:

 

Management likes to maintain a finished goods inventory equal to 25% of the next month’s estimated sales.

Required:

Prepare the company’s production budget for the third quarter of this year (the months of July, August and September) in good form. Include a column for each month and a total column for the entire quarter.

Level: Medium    LO:  3   

Ans: 

 

125. 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.

Ignore taxes.

 

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.

(e.) Prepare a Budgeted Balance Sheet for the end of December.

Level: Hard    LO:  2,3,8,9,10   

Ans: