Question

Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet on April 30 is as follows: MINDEN COMPANY Balance Sheet April 30 Assets $ 10,600 56,000 31,200 215,000 Cash Accounts receivable, customers Inventory Buildings and equipment, net of depreciation Total assets $312,800 Liabilities and Shareholders' Equity $ 65,400 15,300 188,000 44,100 Accounts payable, suppliers Note payable Capital shares, no par Retained earnings $312,800 Total liabilities and shareholders' equity The company is in the process of preparing budget data for May. A number of budget items have already been prepared, as follows: a. Sales are budgeted at $280,000 for May. Of these sales, $84,000 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 are collected in the following month. All of the April 30 receivables will be collected in May b. Purchases of inventory are expected to total $168,000 during May. These purchases will all be on account. 40% of all purchasess 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 wll be paid during May c. The May 31 inventory balance is budgeted at $56,000. d. Operating expenses for May are budgeted at $100,800, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,800 for the month e. The note payable on the April 30 balance sheet will be paid during May, with $80 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $7,300 will be purchased for cash during May. g. During May, the company will borrow $28,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.

Answer 1

10,600 238,000 248,600 1.Cash Budget For the Month of May Beginning cash balance Add collections from customers Total cash available Less cash disbursements: Purchase of inventory Selling and administrative expenses Purchases of equipment Total cash disbursements Excess of cash available over disbursements Financing: Borrowing-note Repayments-note Interest Total financing Ending cash balance 132,600 100,800 7,300 240,700 7,900 28,000 - 15,300 80 12,620 20,520

280,000 2.Budgeted income statement sales cost of goods sold Beginning inventory purchases goods available for sale ending inventory cost of goods sold Gross margin selling and administrative expense =100800+2800 net operating income interest ex pesne 31,200 168,000 199,200 56,000 143,200 136,800 103,600 33,200 80 33,120 9 3.Budgeted balance sheet cash account receivable (280000-84000) *1/ 2 inventory building and equipment, net of depreciation (215000+7300-2800) total assets 20,520 8,000 56,000 219,500 394,020 Liabilities and stockholder equities accounts payable (168000*0.6) note payable common stock retained earning (85900+4060) Total Liabilities and stockholder equities 100,800 28,000 188,000 77,220 394,020

84,000 working: Schedule of Expected Cash Collections Cash sales-May Collections on account receivable: April 30 balance May sales = (280000-84000) *1/2 Total cash receipts 56,000 98,000 238,000 Schedule of Expected Cash Disbursements April 30 accounts payable balance May purchases = 168000*0.4 Total cash payments 65,400 67,200 132,600