Question

Please help me check my answers to this accounting 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 9,500 56,500 Accounts receivable Inventory 53,250 234,000 Buildings and equipment, net of depreciation $353,250 Total assets Liabilities and Shareholders' Equity $79,000 20,000 180,000 Accounts payable Note payable Common shares Retained earnings 74,250 353,250 Total liabilities and shareholders' equity The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $299,000 for May. Of these sales, $89,700 will be for cash; the remainder will be credit sales. One-half of a month's credit sales are collected in the month the sales are made, and the remainder is collected in the following month. All of the April 30 accounts receivable will be collected in May. b. Purchases of inventory are expected to total $169,000 during May. These purchases

The company is in the process of preparing a budget for May and has assembled the following data:

  

a.	Sales are budgeted at $299,000 for May. Of these sales, $89,700 will be for cash; the remainder will be credit sales. One-half of a month’s credit sales are collected in the month the sales are made, and the remainder is collected in the following month. All of the April 30 accounts receivable will be collected in May.
b.	Purchases of inventory are expected to total $169,000 during May. These purchases will all be on account. Forty percent of all purchases are paid for in the month of purchase; the remainder are paid in the following month. All of the April 30 accounts payable to suppliers will be paid during May.
c.	The May 31 inventory balance is budgeted at $42,000.
d.	Selling and administrative expenses for May are budgeted at $89,700, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,250 for the month.
e.	The note payable on the April 30 balance sheet will be paid during May, with $320 in interest. (All of the interest relates to May.)
f.	New refrigerating equipment costing $7,200 will be purchased for cash during May.
g.	During May, the company will borrow $25,200 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.

Answer 1

Schedule of expected cash collections and Schedule of expected cash disbursements are correct

1-b)

Minden Company
Cash Budget
For the Month of May
Beginning cash balance	$9500
Add: Collections from customers	250850
Total cash available	260350
Less: Cash disbursements
Purchase of inventory	146600
Selling and administrative expenses	89700
Purchase of equipment	7200
Total cash disbursements	-243500
Excess of cash available over disbursements	16850
Financing:
Borrowing- note	25200
Repayments- note	-20000
Interest	-320
Total financing	4880
Ending cash balance	$21730

2)

Minden Company
Budgeted Income Statement
For the Month of May
Sales		$299000
Cost of goods sold:
Beginning inventory	$53250
Purchases	169000
Goods available for sale	222250
Ending inventory	(42000)
Cost of goods sold		180250
Gross margin		118750
Selling and administrative expenses (89700+2250)		91950
Net operating income		26800
Interest income		320
Net income		$26480

3)

Minden Company
Budgeted Balance Sheet
May 31
Assets
Cash	$21730
Accounts receivable	104650
Inventory	42000
Building and equipment, net of depreciation	238950
Total assets	$407330
Liabilities and Shareholders' Equity
Accounts payable	$101400
Notes payable	25200
Common stock	180000
Retained earnings	100730
Total liabilities and shareholders' equity	$407330

Accounts receivable= $(299000-89700)*1/2= $104650

Building and equipment, net of depreciation= $234000+7200-2250= $238950

Accounts payable= $169000*60%= $101400

Retained earnings= $74250+26480= $100730