Question

Please help with each requirment

Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given below: 11 Minden Company Balance Sheet April 30 Assets $ 14,500 Cash Accounts receivable 72,750 Inventory 31,750 Euildings and equipment, net of depreciation 209, 000 $328,000 Total assets Liabilities and Stockholders Equity Accounts payable Note payable $ 69,500 16,000 Common stock 180,000 62,500 Retained earnings Total liabilities and stockholders equity 328,000 The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $247,000 for May. Of these sales, $74.100 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 $172.000 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 $58,500. d. Selling and administrative expenses for May are budgeted at $87,600, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $6,850 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $385 in interest. (All of the interest relates to May.) f New refrigerating equipment costing $13.400 will be purchased for cash during May. g. During May, the company will borrow $22,900 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year. Requlred: 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. Complete this question by entering your answers in the tabs below. Req 3 Req 1 and 2 Req 4 Req 5 1. Calculate the expected cash collections for May 2. Calculate the expected cash disbursements for merchandise purchases for May Total cash collections Total cash disbursements Req 1 and 2 Req 3

Answer 1

Solution:

1a.) Schedule of expected cash collection

Cash sales - May	$74,100
Collection on account receivable:
April 30 balance	$72,750
May sales	$86,450
Total cash receipts	$233,300

2.)Schedule of expected cash disbursements

April 30 account payable balance	$69,500
May purchase	$68,800
Total cash payments	$138,300

1,2)

Total cash collection	$233,300
Total cash disbursements	$138,300

3.)

Minden company

Cash budget

For the month of may:

Beginning cash balance	$14,500
Add: collections from customers	$233,300
Total cash receivable	$247,800
Less: cash disbursements
Purchase inventory	$138,300
Selling and administrative expenses	$87,600
Purchase of equipment	$13,400
Total cash disbursements	$239,300
Excess of cash available over disbursements	$8,500($247,800 - $239,300)
Financing:
Borrowing - note	$22,900
Repayments - note	$(16,000)
Interest	$(385)
Total financing	$6,515
Ending cash balance	$15,015

4.)

Minden company

Budgeted income statement.

For the month of may

Sales		$247,000
Cost of goods sold:
Beginning inventory	$31,750
Purchases	$172,000
Goods available for sale	$203,750
Ending inventory	$58,500
Cost of goods sold:		$145,250 ($203,750 - $58,500)
Gross margin		$101,750
Selling and administrative expenses		$94,450
Net operating income		$7,300
Interest expenses		$385
Net income		$6,915

5.)

Minden company

Budgeted balance sheet

May 31

Assets:
Cash	$15,015
Account receivable	$86,450
Inventory	$58,500
Building and equipment, net of depreciation	$215,550
Total assets	$375,515
Liabilities and stockholders' equity
Account payable	$103,200
Note payable	$22,900
Common stock	$180,000
Retained earnings	$69,415
Total liabilities and stockholders' equity	$375,515

Explanation

1.)

Schedule of cash receipts:

Collection on account receivable for may sales =50% × $172,900 ($247,000 -$74,100) =$86,450

2.) Schedule of cash payments for purchase:

May purchases = 40% × 172,000 =$68,800

4.)

Selling and administrative expenses :

$87,600 + $6,850 =$94,450

5.)

Assets:

Account receivable =50% × $172,900 ($247,000 - $74,100) =$86,450

Building and equipment, net of depreciation =$209,000 + $13,400 - $6,850

=$215,550

Liabilities and stockholders' equity

Account payable = 60% × $172,000 =$103,200

Retained earnings =$62,500+ $6,915 =$69,415