Exam_2_063765

Exam_2_063765 - Management 122 Fall 2006 Danny S. Litt EXAM...

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Management 122 Fall 2006 Danny S. Litt EXAM 2 Section ___ Solutions NAME: ________________ I agree to have my grade posted by Student ID Number. ___________________ (Signature) PROBLEM POINTS SCORE 1 25 2 25 3 25 4 25 5 25 6 25 7 25 8 25 TOTAL 200
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M ANAGEMENT 122 N AME : __________________________ 1 Problem 1 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 pur- chase. Other monthly expenses to be paid in cash are $21,900. Monthly depreciation is $20,000. Ignore taxes. Statement of Financial Position October 31 Assets Cash. ............................................................................................. $ 16,000 Accounts receivable (net of allowance for uncollectible accounts). .......................... 74,000 Inventory . ..................................................................................... 140,400 Property, plant and equipment (net of $500,000 accumulated depreciation) . ........................... 1,066,000 Total assets. .................................................................................. $1,296,400 Liabilities and Stockholders’ Equity Accounts payable . ........................................................................ $ 240,000 Common stock . ............................................................................ 640,000 Retained earnings. ........................................................................ 416,400 Total liabilities and stockholders’ equity. .................................... $1,296,400 Requirements: 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.
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M ANAGEMENT 122 N AME : __________________________ 2 Answer: a. November December Sales. ........................................................................... $360,000 $380,000 Schedule of Expected Cash Collections Accounts receivable. ................................................... $ 74,000 November sales . ......................................................... 270,000 $ 72,000 December sales. .......................................................... 285,000 Total cash collections . ................................................ $344,000 $357,000 b. November December Cost of goods sold . ..................................................... $234,000 $247,000 Merchandise Purchases Budget
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This note was uploaded on 03/10/2010 for the course MGMT 122 taught by Professor Saouma during the Winter '08 term at UCLA.

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Exam_2_063765 - Management 122 Fall 2006 Danny S. Litt EXAM...

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