Question

Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given below Minden Company Balance Sheet April 30 Assets Cash 9,e00 54,e0e 30,000 207,e00 $ 300,000 bok Accounts receivable Inventory Buildings and equipment, net of depreciation rint Total assets ences Liabilities and Stockholders Equity Accounts payable Note payable 63,000 14, 500 180,000 42,500 Common stock Retained earnings Total 1iabilities and stockholders' equity $ 300,000 The company is in the process of preparing a budget for May and has assembled the following data:

Answer 1

1.

Minden Company
Schedule of Expected Cash Collections
Cash sales - May	60000
Collections on account receivable:
April 30 balance	54000
May sales [($220000-$60000) x 60%]	96000
Total cash collections	210000

2.

Minden Company
Schedule of Expected Cash Disbursements
April 30 accounts payable balance	63000
May purchases ($120000 x 50%)	60000
Total cash disbursements	123000

3.

Minden Company
Cash Budget
For the Month of May
Beginning cash balance $	9000
Add collection from customers	210000
Total cash available	219000
Less cash disbursements:
Purchase of inventory	123000
Selling and administrative expenses	72000
Purchases of equipment	6500
Total cash disbursements	201500
Excess of cash available over disbursements	17500
Financing:
Borrowing-note	20000
Repayments-note	-14500
Interest	-100
Total financing	5400
Ending cash balance $	22900

4.

Minden Company
Budgeted Income Statement
For the Month of May
Sales revenue	220000
Cost of goods sold	110000
Gross profit	110000
Selling and administrative expense	74000
Operating income	36000
Interest expense	100
Net income $	35900

Working:

Beginning inventory balance	30000
Add purchases	120000
Cost of goods available	150000
Ending inventory balance	40000
Cost of goods sold	110000

5.

Minden Company
Budgeted Balance Sheet
May 31
Assets
Cash	22900
Accounts receivable	64000
Inventory	40000
Buildings and equipment, net of depreciation	211500
($207000 + $6500 - $2000)
Total assets $	338400
Liabilities and Stockholders' Equity
Accounts payable ($120000 x 50%)	60000
Note payable	20000
Common stock	180000
Retained earnings ($42500 + $35900)	78400
Total liabilities and stockholders' equity $	338400