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Perfect Gas Corporation supplies compressed gases to industry customers. Data regarding the store's operations follow:

• Sales are budgeted at $345,000 for November, $230,000 for December, and $320,000 for January.

• Collections are expected to be 60% in the month of sale, 34% in the month following the sale, and 6% uncollectible.

• The cost of goods sold is 70% of sales.

• The company desires ending merchandise inventory to equal 80% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

• Other monthly expenses to be paid in cash are $12,000.

• Monthly depreciation is $16,000.

• Equipment purchases of $110,000 were paid in cash in November.

• Dividends of $35,000 were declared and paid in December.

• Any borrowings must be in $1,000 increments at 7% interest. Assume interest accrues at the beginning of the month and is paid at the end of the month. The company must maintain a minimum cash balance of $5,000.

• Ignore income taxes.

Prepare the following budgets for November and December and total for the two months in good form in excel and submit via bblearn by 5/9 at noon:

a. Prepare a Schedule of Expected Cash Collections

b. Prepare a Merchandise Purchases Budget

c. Prepare Cash Budgets

d. Prepare Budgeted Income Statements

e. Prepare a Budgeted Balance Sheet

Prepare a letter/memo to the company's CEO with specific recommendations regarding your budget.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M945752

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