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 | $ | 9,000 |
Accounts receivable | 54,000 | |
Inventory | 30,000 | |
Buildings and equipment, net of depreciation | 207,000 | |
Total assets | $ | 300,000 |
Liabilities and Stockholders’ Equity | ||
Accounts payable | $ | 63,000 |
Note payable | 14,500 | |
Common stock | 180,000 | |
Retained earnings | 42,500 | |
Total liabilities and stockholders’ equity | $ | 300,000 |
The company is in the process of preparing a budget for May and has assembled the following data:
Sales are budgeted at $220,000 for May. Of these sales, $60,000 will be for cash; the remainder will be credit sales. Each month’s credit sales are collected 60% in the month of sale and 40% in the month following the sale. All of the April 30 accounts receivable will be collected in May.
Purchases of inventory are expected to total $120,000 during May. These purchases will all be on account. The company pays for 50% of its merchandise purchases in the month of the purchase and the remaining 50% in the month following the purchase. All of the April 30 accounts payable to suppliers will be paid during May.
The May 31 inventory balance is budgeted at $40,000.
Selling and administrative expenses for May are budgeted at $72,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month.
The note payable on the April 30 balance sheet will be paid during May, with $100 in interest. (All of the interest relates to May.)
New refrigerating equipment costing $6,500 will be purchased for cash during May.
During May, the company will borrow $20,000 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.
1-a) | Schedule of Expected cash collection | ||||||
Cash sales-May | 60,000 | ||||||
Collections on account receivable | |||||||
April 30 balance | 54,000 | ||||||
May sales | (220000-60000)*60% | 96000 | |||||
total cash recepits | 210,000 | ||||||
Schedule of Expected cash disbursements | |||||||
April 30 accounts payable balance | 63,000 | ||||||
May purchases | (120000*60%) | 60000 | |||||
total cash payments | 123,000 | ||||||
1-b) | Cash Budget | ||||||
Beginning cash balance | 9,000 | ||||||
Add Collections from customers | 210,000 | ||||||
total cash available | 219,000 | ||||||
less Cash disbursements | |||||||
purchase of inventoru | 123,000 | ||||||
selling and administrative expense | 72,000 | ||||||
purchase of Equipment | 6,500 | ||||||
total cash disbursements | 201,500 | ||||||
Excess of cash available over disbursements | 17,500 | ||||||
financing: | |||||||
borrowing -note | 20,000 | ||||||
Repayments-note | -14,500 | ||||||
interest | -100 | ||||||
total financing | 5,400 | ||||||
Ending cash balance | 22,900 | ||||||
Budgeted income statement | |||||||
sales | 220,000 | ||||||
cost of goods sold: | |||||||
beginning inventory | 30,000 | ||||||
purchases | 120,000 | ||||||
goods available for sale | 150,000 | ||||||
ending invnetory | 40,000 | ||||||
cost of goods sold: | 110,000 | ||||||
Gross margin | 110,000 | ||||||
Selling and administrative expesne | 74,000 | ||||||
net operating income | 36,000 | ||||||
interest expesne | 100 | ||||||
net income | 35,900 | ||||||
Budgeted balance sheet | |||||||
Assets | |||||||
Cash | 22,900 | ||||||
Account receivable | 64000 | ||||||
inventory | 40,000 | ||||||
buildings & equipment,net of depreciaiton | 211500 | ||||||
(232000+8800-5000) | |||||||
total Assets | 338,400 | ||||||
Laibilities & stockholder's Equity | |||||||
Accounts payable | 60000 | ||||||
note payable | 20,000 | ||||||
common stock | 180,000 | ||||||
Retained earnings | 78,400 | ||||||
total liabilities & stockholders equity | 338400 | ||||||
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of April 30 is...
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 $ 9,000 Accounts receivable 54,000 Inventory 30,000 Buildings and equipment, net of depreciation 207,000 Total assets $ 300,000 Liabilities and Stockholders’ Equity Accounts payable $ 63,000 Note payable 14,500 Common stock 180,000 Retained earnings 42,500 Total liabilities and stockholders’ equity $ 300,000 The company is in the process of preparing a...
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 $ 9,000 Accounts receivable 54,000 Inventory 30,000 Buildings and equipment, net of depreciation 207,000 Total assets $ 300,000 Liabilities and Stockholders’ Equity Accounts payable $ 63,000 Note payable 14,500 Common stock 180,000 Retained earnings 42,500 Total liabilities and stockholders’ equity $ 300,000 The company is in the process of preparing...
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 $ 16,500 Accounts receivable 67,000 Inventory 32,000 Buildings and equipment, net of depreciation 249,000 Total assets $ 364,500 Liabilities and Stockholders’ Equity Accounts payable $ 68,750 Note payable 20,500 Common stock 180,000 Retained earnings 95,250 Total liabilities and stockholders’ equity $ 364,500 The company is in the process of preparing a...
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 $ 14,600 Accounts receivable 55,000 Inventory 43,500 Buildings and equipment, net of depreciation 223,000 Total assets $ 336,100 Liabilities and Stockholders’ Equity Accounts payable $ 74,500 Note payable 15,000 Common stock 180,000 Retained earnings 66,600 Total liabilities and stockholders’ equity $ 336,100 The company is in the process of preparing a...
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 $ 10,000 Accounts receivable 62,750 Inventory 32,750 Buildings and equipment, net of depreciation 219,000 Total assets $ 324,500 Liabilities and Stockholders’ Equity Accounts payable $ 69,000 Note payable 22,700 Common stock 180,000 Retained earnings 52,800 Total liabilities and stockholders’ equity $ 324,500 The company is in the process of preparing a...
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 $ 18,700 Accounts receivable 70,250 Inventory 41,250 Buildings and equipment, net of depreciation 230,000 Total assets $ 360,200 Liabilities and Stockholders’ Equity Accounts payable $ 72,250 Note payable 13,700 Common stock 180,000 Retained earnings 94,250 Total liabilities and stockholders’ equity $ 360,200 The company is in the process of preparing a...
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 $ 14,500 Accounts receivable 72,750 Inventory 31,750 Buildings and equipment, net of depreciation 209,000 Total assets $ 328,000 Liabilities and Stockholders’ Equity Accounts payable $ 69,500 Note payable 16,000 Common stock 180,000 Retained earnings 62,500 Total liabilities and stockholders’ equity $ 328,000 The company is in the process of preparing a...
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 $ 10,300 Accounts receivable 70,000 Inventory 43,000 Buildings and equipment, net of depreciation 227,000 Total assets $ 350,300 Liabilities and Stockholders’ Equity Accounts payable $ 86,000 Note payable 23,000 Common stock 180,000 Retained earnings 61,300 Total liabilities and stockholders’ equity $ 350,300 The company is in the process of preparing a...
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 $ 9,400 Accounts receivable 78,500 Inventory 44,000 Buildings and equipment, net of depreciation 221,000 Total assets $ 352,900 Liabilities and Stockholders’ Equity Accounts payable $ 72,000 Note payable 19,700 Common stock 180,000 Retained earnings 81,200 Total liabilities and stockholders’ equity $ 352,900 The company is in the process of preparing a...
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 $ 9,600 Accounts receivable 54,750 Inventory 53,750 Buildings and equipment, net of depreciation 214,000 Total assets $ 332,100 Liabilities and Stockholders’ Equity Accounts payable $ 70,500 Note payable 18,100 Common stock 180,000 Retained earnings 63,500 Total liabilities and stockholders’ equity $ 332,100 The company is in the process of preparing a...