Question

Check my wol 10 Minden Company Balance Sheet April 30 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings Total liabilities and stockholders' equity $ 10,000 62,750 32,750 219,000 $ 324,500 points Skipped $ 69,000 22,700 180,000 52,800 $ 324,500 eBook Print The company is in the process of preparing a budget for May and has assembled the following data: References a. Sales are budgeted at $254,000 for May. Of these sales, $76,200 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 $137,000 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 $45,000. d. Selling and administrative expenses for May are budgeted at $98,400, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $5,550 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $350 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $8,700 will be purchased for cash during May. g. During May, the company will borrow $27,400 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 from customers for May. 2. Calculate the expected cash disbursements for merchandise purchases for May.

Answer 1

Answer with working notes is given below

May $254,000 Budgeted Sales (value) Expected Cash Collection Cash Sales Credit sales collected in May April credit sales collected in May Total collections from customers May $76,200 $88,900 ($254,000-$76,200)/2 $62,750 $227,850 Expected Cash Payments Purchases May $137,000 Current month purchase April month Account payable Total payments for Vendors $54,800 40% paid in current month $69,000 $123,800 3 Cash Budget for May May $10,000 $227,850 $27,400 $265,250 Opening Balance Cash collections from Customers Note payable Total Cash available Cash paid for Merchandise purchase Selling and administration expense Note payable paid Interest on note payable New Refrigerator Toil Cash paid $123,800 $98,400 $22,700 $350 $8,700 $253,950 Closing Cash balance $11,300 $254,000 Minden Company Budgeted Income Statement for May Month Sales Cost of Goods sold Opening stock $32,750 Les: Purchases $137,000 $169,750 Less: Closing stock $45,000 Cost of Goods sold Gross Profit Less: Expenses Selling and administration expense $98,400 Depreciation $5,550 Interest on short term note Net profit $124,750 $129,250 $103,950 $350 $24,950 $11,300 $88,900 $45,000 Minden Company Budgeted Balance Sheet As of May 31 Assets Cash Accounts receivable Inventory Building and Equipment $219,000 Add: Purchases $8,700 $227,700 Less: Depreciation during the year -$5,550 Total Assets Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings Total Liabilities and Stockholders' Equity $222,150 $367,350 $82,200 $27,400 $180,000 $77,750 $367,350 Retained earnings Opening balance Add: Net profit Closing balance of Retained earnings $52,800 $24,950 $77,750