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Tutorial Chapter 7

This document provides two tutorial questions involving the preparation of budgets for two companies, Weltin Industrial Gas Corporation and Capid Corporation. For Weltin, the tasks include preparing a schedule of expected cash collections, merchandise purchases budget, cash budgets, budgeted income statements for November and December, and a budgeted balance sheet for the end of December. For Capid, the tasks are to prepare a schedule of expected cash collections and merchandise purchases budget for November and December. The document provides sales forecasts and details of collection periods, cost of goods sold, purchasing periods, expenses and beginning account balances to complete the required budgets.

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195 views2 pages

Tutorial Chapter 7

This document provides two tutorial questions involving the preparation of budgets for two companies, Weltin Industrial Gas Corporation and Capid Corporation. For Weltin, the tasks include preparing a schedule of expected cash collections, merchandise purchases budget, cash budgets, budgeted income statements for November and December, and a budgeted balance sheet for the end of December. For Capid, the tasks are to prepare a schedule of expected cash collections and merchandise purchases budget for November and December. The document provides sales forecasts and details of collection periods, cost of goods sold, purchasing periods, expenses and beginning account balances to complete the required budgets.

Uploaded by

fitrieyfiey
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BT12203 BUSINESS ACCOUNTING

CHAPTER 7: THE MASTER BUDGET AND RESPONSIBILITY ACCOUNTING

TUTORIAL QUESTIONS

1. Weltin Industrial Gas Corporation supplies acetylene and other compressed gases to industry.
Data regarding the store's operations follow:
 Sales are budgeted at $390,000 for November, $370,000 for December, and $380,000 for
January.
 Collections are expected to be 90% in the month of sale, 5% in the month following the
sale, and 5% uncollectible.
 The cost of goods sold is 60% of sales.
 The company purchases 70% of its merchandise in the month prior to the month of sale
and 30% 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 $21,800.
 Monthly depreciation is $18,000.
 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. 
2. Capid Corporation is a wholesaler of industrial goods. Data regarding the store's operations
follow:
 Sales are budgeted at $360,000 for November, $330,000 for December, and $320,000 for
January.
 Collections are expected to be 60% in the month of sale, 36% in the month following the
sale, and 4% uncollectible.
 The cost of goods sold is 75% of sales.
 The company purchases 40% of its merchandise in the month prior to the month of sale
and 60% in the month of sale. Payment for merchandise is made in the month following
the purchase.
 The November beginning balance in the accounts receivable account is $77,000.
 The November beginning balance in the accounts payable account is $271,000.

Required:
a) Prepare a Schedule of Expected Cash Collections for November and December.
b) Prepare a Merchandise Purchases Budget for November and December.

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