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 Recounts payable Note payable Common stock Retained earnings Total liabilities and stockholders' equity $ 10,500 57,000 42,500 236,000 $ 346,000 $ 72,750 21,200 180,000 72,050 $ 346,000 The company is in the process of preparing a budget for May and has assembled the following data: a Sales are budgeted at $296,000 for May. Of these sales, $88,800 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 $192,000 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 < Prey 2 of 5 !! Next >

Answer 1

88800 Minden Company Schedule of Expected Cash Collections Cash Sales-May Collection on Accounts Receivable: April 30 balance May Sales Total Cash Receipts Credit Sales = $296,000 - $88,800 = $207,200 Collection = 50% * $207,200 = $103,600 57000 103600 249400 Minden Company Schedule of Expected Cash Disbursements April 30 Accounts Payable Balance May Purchases Total Cash payments May Purchase Payment = 40% * $192,000 = $76,800 72750 76800 149550

10500 249400 259900 Minden Company 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 Purchase of equipment Total Cash disbursements Excess of cash available over disbursements Financing: Borrowing-note Repayment-note Interest Total Financing Ending cash balance 149550 98 700 6800 255050 4850 23200 -21200 -220 1780 6630

296000 Minden Company Budgeted Income Statement For the Month of May Sales Cost of Goods sold: Beginning Inventory 42500 Add: Purchases 192000 Cost of Goods available for Sale 234500 Less: Ending Inventory 51500 Cost of Goods sold Gross Margin Selling and Administrative Expenses Net Operating Income Interest Net Income 183000 113000 100850 12150 220 11930

Minden Company Budgeted Balance Sheet May 31 Assets Cash Accounts Receivable Inventory Building and Equipment, Net of Depreciation Total Assets Liabilities and Stockholders' Equity Accounts Payable Notes Payable Common Stock Retained Earnings Total Liabilities and Stockholders' Equity 6630 103600 51500 240650 402380 115200 23200 180000 83980 402380 Accounts Receivable = ($296,000 - $88,800) * 50% = $ 103,600 Building and Equipment, Net of Depreciation = $236,000 + $6,800 - $2,150 = $240,650 Accounts Payable = $192,000 * 60% = $115,200 Retained Earnings = $72,050 + $11,930 = $83,980