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 $ 16,500 67,000 32,000 249,000 Total assets $364,500 Liabilities and Shareholders' Equity Accounts payable Note payable Common shares Retained earnings $68,750 20,500 180,000 95,250 Total liabilities and shareholders' equity 9364,500 The company is in the process of preparing a budget for May and has assembled the following data:

Answer 1

Solution Requirement 1a.: $72,300 Schedule of Expected Cash Collections Cash sales - May Collections on account receivable: April 30 balance May sales ($241,000 - $72,300) x 1/2 Total cash receipts $67,000 $84,350 $223,650 Accounts Receivable as at May end = ($241,000 - $72,300) x 1/2 = $84,350 Schedule of Expected Cash Disbursements April 30 accounts payable balance May purchases ($191,000 x 40%) Total cash payments $68,750 $ 76,400 $145,150 Accounts Payable as at May end = $191,000 x 60% = $114,600 Requirement 1b. : Cash budget for May $16,500 $223,650 $240,150 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 $145,150 $76,200 $6,600 $227,950 $12,200 $27,000 ($20,500) ($170) $6,330 $18,530

Requirement 2: Budgeted Income Statements for May $241,000 Minden Company Budgeted Income Statement For the Month of May Sales revenue Cost of goods sold: Beginning inventory Add: purchases Cost of goods available for sale Less: Ending inventory Gross profit Operating expenses: Selling and administrative expense Interest expense Depreciation Net income $32,000 $191,000 $223,000 ($86,000) $137,000 $104,000 $76,200 $170 $5,300 $81,670 $22,330 Requirement 3 : Budgeted balance sheet as of May 31. Minden Company Budgeted Balance Sheet May 31 Assets Cash Accounts Receivable Inventory Building and equipment, net of depreciation ($249,000 + $6,600 - $5,300) Total assets $18,530 $84,350 $86,000 $250,300 $439,180 Liabilities and Stockholder's Equity Accounts payable Note payable Common shares Retained earnings ($95,250 + $ 22,330) Total liabilities and stockholder's equity $114,600 $27,000 $180,000 $117,580 $439,180