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Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of...

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

$

12,000

  Accounts receivable

77,500

  Inventory

42,000

  Buildings and equipment, net of depreciation

225,000

  Total assets

$

356,500

Liabilities and Stockholders’ Equity

  Accounts payable

$

78,250

  Note payable

19,300

  Common stock

180,000

  Retained earnings

78,950

  Total liabilities and stockholders’ equity

$

356,500

  

The company is in the process of preparing a budget for May and has assembled the following data:

  

a.

Sales are budgeted at $231,000 for May. Of these sales, $69,300 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 $139,000 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 $55,000.

d.

Selling and administrative expenses for May are budgeted at $83,400, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $6,200 for the month.

e.

The note payable on the April 30 balance sheet will be paid during May, with $155 in interest. (All of the interest relates to May.)

f.

New refrigerating equipment costing $12,500 will be purchased for cash during May.

g.

During May, the company will borrow $24,000 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-a.

Prepare a schedule of expected cash collections from sales and a schedule of expected cash disbursements for merchandise purchases..

  

1-b.

Prepare a cash budget for May. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

  

2.

Prepare a budgeted income statement for May.

  

3.

Prepare a budgeted balance sheet as of May 31.

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Answer #1

Schedule of Expected Cash Collection From Debtors And Disbursement to Suppliers % Of Payment or Particulars Month receipt Amo​​​​​​MINDEN COMPANY Cash Budget Statement for the month of May Amount $2,31,000 Particulars Sales Growth Rate Credit Sales $1,61,7Minden Company Budgeted Balance Sheet as on May 31 Assets Current assets: Cash Investments Inventories Accounts receivable PrBudgeted Income Statement MINDEN COMPANY For the Month of May Financial Statements in U.S. Dollars Revenue Gross Sales Less:Minden Company (corrected) Budgeted Balance Sheet as on May 31 Assets Current assets: Cash Investments Inventories Accounts rWorking Note- 1)Retained Earnings Opening Balance Add Profit for the month of may Closing Balance 78950 15245 94195 2)Notes P

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