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 Accounts receivable Inventory Buildings and equipment, net of depreciation $ 10,300 70,000 43,000 227,000 Total assets 350,300 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings $86,000 23,000 180,000 61,300 Total liabilities and stockholders' equity 350,300 The company is in the process of preparing a budget for May and has assembled the following data a. Sales are budgeted at $276,000 for May. Of these sales, $82,800 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 $147,000 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 $43,000 d. Selling and administrative expenses for May are budgeted at $97,500, exclusive of depreciation. These e. The note payable on the April 30 balance sheet will be paid during May, with $235 in interest. (All of the f. New refrigerating equipment costing $12,100 will be purchased for cash during May. expenses will be paid in cash. Depreciation is budgeted at $3,200 for the month interest relates to May.) g. During May, the company will borrow $29,200 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

M company
Schedule of cash collections
Particulars	Amount	Amount
cash sales		82800
collection of accounts receivable		70000
cash from may credit sales ((276000-82800)/2)		96600
Total cash receipts		249400
Schedule of cash disbursements
Particulars	Amount	Amount
payment of outstanding balance		86000
payment of may credit purchases (147000*40%)		58800
Total Cash disbursements		144800
M company
cash Budget
for the month of May
Particulars	Amount	Amount
Beginning cash balance		10300
Add: cash collection		249400
Total cash available		259700
Less: Cash disbursements
For merchandise		144800
For selling and administrative expenses		97500
For equipment		12100
Total cash disbursements		254400
Excess ( deficiency) of cash		5300
Financing
Borrowing		29200
repayment		-23000
Interest		-235
Ending cash balance		11265
M company
Budgeted Income Statement
For the month ended May
Particluars		Amount
Budgeted sales		276000
less:cost of goods sold (43000+147000-43000)		147000
Gross profit		129000
less:
Selling and adminisrative expenses		97500
Depreciation		3200
Interest		235
Net Income		28065
M company
Budgeted Balance Sheet
As at May 31
Particluars		Amount
Current Assets:
Cash		11265
Accounts receivable		96600
Inventory		43000
Total Current Assets		150865
Add:Building equipment, net (227000+12100-3200)		235900
Total Assets		386765
Labilities and Equity
Accounts payable (147000*60%)		88200
Notes Payable		29200
Capital Stock		180000
Retained earnings (61300+28065)		89365
Total Liabilities and stockholders equity		386765