Question

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 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 $ 11,400 75,000 41,000 224,000 $ 351,400 $ 70,000 15,500 180,000 85,900 $ 351,400 The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $220,000 for May. Of these sales, $66,000 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 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 $128,000 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 $56,000. d. Selling and administrative expenses for May are budgeted at $86,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $6,750 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $565 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $6,700 will be purchased for cash during May. g. During May, the company will borrow $25,300 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

220,000 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 =86000+6750 | net operating income interest expesne net income 41,000 128,000 169,000 56,000 113,000 107,000 92,750 14,250 565 13,685 3.Budgeted balance sheet cash account receivable (220000-66000) *1/2 inventory building and equipment, net of depreciation (224000+6700-6750) total assets 24,735 77,000 56,000 223,950 381,685 Liabilities and stockholder equities accounts payable (128000*0.6) note payable common stock retained earning (85900+4060) Total Liabilities and stockholder equities 76,800 25,300 180,000 99,585 381,685

66.000 la) Schedule of Expected Cash Collections Cash sales-May Collections on account receivable: April 30 balance May sales =(220000-66000) *1/2 Total cash receipts 75,000 77,000 218,000 Schedule of Expected Cash Disbursements April 30 accounts payable balance May purchases =128000*0.4 Total cash payments 70,000 51,200 121,200 11,400 218,000 229,400 121,200 86,000 1b. 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 6,700 213,900 15,500 125,300 |- 15,500 565 9,235 24,735