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 stockholder' equity $ 14.300 55.750 49.250 217.000 6 336, 300 65,000 16.500 180,000 74.800 6 336,300 The company is in the process of preparing a budget for May and has assembled the following data: a Sales are budgeted at $292,000 for May. Of these sales, $87,600 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 $216,000 during Moy. 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 $72,500 d. Selling and administrative expenses for May are budgeted at $82,200, exclusive of depreciation. These expenses will be paid in cash Depreciation is budgeted at $4,500 for the month e. The note payable on the April 30 balance sheet will be paid during May, with $375 in interest. All of the interest relates to May.) f. New refricerating equipment costina $7100 will be purchased for cash during May Prey 2 of 2 Next

Answer 1

Answer -

1 and 2. Answer -

Total cash Collections	$245550
Total cash disbursements	$151400

Calculation:

1.

Expected Cash Collection from Customers
Cash sales-May	$87600
Collections on accounts receivable:
April 30 accounts receivable balance	$55750
May Sales ($204400 * 50%)	$102200
Total cash Collections	$245550

2.

Expected Cash disbursements for Merchandise Purchases
April 30 accounts payable balance	$65000
May Purchases ($216000 * 40%)	$86400
Total cash payments	$151400

3. Answer -

Minden Company
Cash Budget
For the Month of May
Beginning cash balance	$14300
Add: Collection from customers	$245550
Total cash available	$259850
Less: Cash disbursements
Purchase of inventory	$151400
Selling and administrative expenses	$82200
Purchases of equipment	$7100
Total cash disbursements	$240700
Excess of cash available over disbursements	$19150
Financing:
Borrowing-Note	$20500
Repayments-Note	($16500)
Interest	($375)
Total financing	$3625
Ending cash balance	$22775

4. Answer -

Minden Company
Budgeted Income Statement
For the Month of May
Sales		$292000
Cost of goods sold:
Beginning inventory	$49250
Add: Purchases	$216000
Goods available for sales	$265250
Less: Ending inventory	$72500
		$192750
Gross margin		$99250
Selling and administrative expenses		$86700
Net operating income		$12550
Interest income		$375
Net income		$12175

Calculation:

Selling and administrative expenses = $82200 + $4500 (depreciation expense) = $86700

5. Answer -

Minden Company
Budgeted Balance Sheet
May 31
Assets
Cash	$22775
Accounts receivable	$102200
Inventory	$72500
Buildings and equipment, net of depreciation	$219600
Total assets	$417075
Liabilities and Stockholders Equity
Accounts payable	$129600
Notes payable	$20500
Common stock	$180000
Retained earnings	$86975
Total liabilities and stockholders equity	$417075

Calculation:

Accounts receivable = (50% * $204400) = $102200 (paid in June)

Buildings and equipment, net of depreciation = $217000 + $7100 (newly purchases) - $4500 (depreciation expense) = $219600

Accounts payable = ($216000 * 60%) = $129600 (paid in June)

Retained earnings = $74800 + $12175 (net income) = $86975

Cash = Total liabilities and stockholders equity - (Accounts receivable + Inventory + Buildings and equipment, net of depreciation)

Cash = $417075 - ($102200 + $72500 + $219600) = $22775