Question

Balance Sheet April 30 Assets Cash $ 12,700 Accounts receivable 66,500 Inventory 48,500 Buildings and equipment, net of 229,000 depreciation Total assets $356,700 Liabilities and Stockholders' Equity Accounts payable $ 67,500 Note payable 19,100 Common stock 180,000 Retained earnings 90,100 Total liabilities and stockholders' equity $356,700 The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $262.000 for May. Of these sales. $78,600 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 $196,000 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 $84.000. d. Selling and administrative expenses for May are budgeted at $87,300. exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $6,400 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $550 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $13.000 will be purchased for cash during May. g. During May, the company will borrow $28.900 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year. Required: 1. Calculate the expected cash collections from customers 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 1 and 2 Req3 Req 4 Req5 1. Calculate the expected cash collections from customers for May. 2. Calculate the expected cash disbursements for merchandise purchases for May. Total cash collections Total cash disbursements Reg 1 and 2 Req3 >

Answer 1

a)	Expected Cash collection for May
	Cash sales for May			$   78,600.00
	50% of credit sales of May			$   91,700.00	($ 262000 - $ 78600) x 50%
	Accounts Receivable balance			$   66,500.00
				$ 236,800.00

b)	Cash disbursement for May (for merchandise purchase)
	40% of the purchase of May				$   78,400.00
	Accounts Payable balance				$   67,500.00
					$ 145,900.00

c)	Cash Budget for May
	Beginning balance			$   12,700.00
Add:	Collections			$ 236,800.00
	Total cash available			$ 249,500.00
Less:	Disbursements
	Merchandise purchase			$ 145,900.00
	Selling and Adm. Expenses			$   87,300.00
	Notes payable paid			$   19,650.00
	Refrigerator purchased			$   13,000.00
	Total disbursements			$ 265,850.00
	Net cash available			$ (16,350.00)
Add:	Borrowal			$   28,900.00
	Ending cash balance			$   12,550.00

d)	Income Statement
	Sales	$ 262,000.00
Less:	COGS ($ 48500 + $ 196000 - $ 84000)	$ 160,500.00
	Gross Profit	$ 101,500.00
Less:	Expenses:
	Selling and Adm. Expenses	$   87,300.00
	Depreciation	$     6,400.00
	Interest on Loan	$         550.00
	Net Income	$     7,250.00

e)	Balance Sheet
	Assets
	Cash		$   12,550.00
	Accounts Receivable		$   91,700.00
	Inventory		$   84,000.00
	B&E ($ 229000 + $ 13000 - $ 6400)		$ 235,600.00
			$ 423,850.00
	Liabilities and Equity
	Accounts Payable		$ 117,600.00
	Note Payable		$   28,900.00
	Common Stock		$ 180,000.00
	Retained Earnings ($ 90100 + $ 7250)		$   97,350.00
			$ 423,850.00

Is it okay?