Question

$ Minden Company Balance Sheet April 30 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings Total liabilities and stockholders equity 12,000 77,500 42,000 225,000 356,500 $ $ 78,250 19,300 180,000 78,950 356,500 $ 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.

Answer 1

1	Minden Company
	Schedule of Expected Cash Collections
	Cash sales - May	69300
	Collections on account receivable:
	April 30 balance	77500
	May credit sales [($231000-$69300)/2]	80850
	Total cash receipts	227650
2	Minden Company
	Schedule of Expected Cash Disbursements
	April 30 accounts payable balance	78250
	May purchases ($139000 x 40%)	55600
	Total cash payments	133850
3	Minden Company
	Cash Budget
	For the Month of May
	Beginning cash balance $	12000
	Add collections from customers	227650
	Total cash available	239650
	Less cash disbursements:
	Purchase of inventory	133850
	Selling and administrative expenses	83400
	Purchases of equipment	12500
	Total cash disbursements	229750
	Excess of cash available over disbursements	9900
	Financing:
	Borrowing-note	24000
	Repayments-note	-19300
	Interest	-155
	Total financing	4545
	Ending cash balance $	14445

4	Minden Company
	Budgeted Income Statement
	For the Month of May
	Sales revenue		231000
	Cost of goods sold:
	Beginning inventory balance	42000
	Add purchases	139000
	Cost of goods available	181000
	Ending inventory balance	55000
	Cost of goods sold		126000
	Gross profit		105000
	Selling and administrative expense	83400
	Depreciation expense	6200
	Interest expense	155	89755
	Net income $		15245

5	Minden Company
	Budgeted Balance Sheet
	May 31
	Assets
	Cash	14445
	Accounts receivable	80850
	Inventory	55000
	Buildings and equipment, net of depreciation	231300
	($225000 + $12500 - $6200)
	Total assets $	381595
	Liabilities and Stockholders' Equity
	Accounts payable ($139000 x 60%)	83400
	Note payable	24000
	Common stock	180000
	Retained earnings ($78950 + $15245)	94195
	Total liabilities and stockholders' equity $	381595