Question

Check my work Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given below: Minden Coatpanty ance Sheet April 30 Sinn $ 10,00 70,000 43,000 227,000 $ 350, 300 Accoants receivable Inary Buildings and equipment, net of depreciation Total assets Liabilities and stockholders' Equity Acants payable Note payable Conan slock Retnine w ings Total liabilities and stokholders equiry $ 6,000 23.000 130,000 $ 350, 300 References The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $276.000 for May. Of these sales, $82,800 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 receiveble will be collected in May. b. Purchases of inventory are expected to total $147,000 during Mey. 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 in bucated at $43,000. d. Selling and administrative expenses for May are budgeted et 597.500, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $3,200 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $235 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $12,100 will be purchased for cash during May g. During May, the company will borrow $29,200 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year. Required: 1. Calculate the expected cash collections for May. 2. Calculate the expected cash disbursements for merchandise purchases for May. 3. Prepare a cash budget for May. 4. Prepare a budgeted income statement for May. 5. Prepare a budgeted balance sheet as of May 31.

Answer 1

a
Schedule of expected cash collections
Cash sales May	82800
Collections on accounts receivable
April 30 balance	70000
May sales (276000-82800)*50%	96600
Total Cash Receipts	249400
Schedule of expected cash disbursments
April 30 Accounts payable balance	86000
May purchases 147,000*40%	58800
Total Cash payments	144800
Minden compnay Cash Budget For the month of May
Beginning Cash balance	10300
Add: Collection from customers	249400
Total Cash Available	259700
Less Cash Disbursements
Purchase of inventory	144800
Selling and administrative expense	97,500
Purchase of Equipment	12100
Total Cash Disbursements	254400
Excess of cash available over Disbursements	5300
Financing
Borrowing Note	29200
Repayment note	-23000
Interest	-235
Total Financing	5965
Ending Cash Balance	11265
Minden Company Budgeted Income Statement For the month of May
Sales		276000
Cost of goods sold
Beginning Inventory	43000
Purchases	147000
Goods available for sale	190000
Ending Inventory	-43000
Cost of goods sold		147000
Gross Margin		129000
Selling and administrative expense 87,500+3200		90700
Net operating Income		38300
Interest income		-235
Net Income		38065
Minden Company Budgeted Balance Sheet May 31
Assets
Cash	11265
Accounts Receivable (276000-82800)*50%	96600
Inventory	43000
Building and Equipment, Net of depreciation 237000+12100-3200	245900
Total Assets	396765
Liabilities and Stockholder's Equity
Accounts payable 147,000*60%	88200
Note Payable	29200
Common Stock	180000
Retained earnings 61300+38065	99365
Total Liability and stock holders Equity	396765