Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2347867 • Letter: M
Question
Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given below:
592,850
$710,000
85,200
$710,000
Sales are budgeted at $268,000 for May. Of these sales, $70,000 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.
Purchases of inventory are expected to total $196,000 during May. These purchases will all be on account. Sixty percent of all purchases are paid for in the month of purchase; the remainder are paid in the following month. All of the April 30 accounts payable to suppliers will be paid during May.
What is the expected cash receipts from sales and the expected cash payments for merchandise purchases? (Omit the "$" signs in your response.)
Compute the following for the month of May. (Hint: Prepare your answer using the layout of a Cash Budget.) (Deficiencies should be preceded by a minus sign when appropriate. Input all other amounts as positive values. Omit the "$" signs in your response.)
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Minden CompanyBalance Sheet
April 30 Assets Cash $10,650 Accounts receivable 71,000 Inventory 35,500 Buildings and equipment, net of depreciation
592,850
Total assets$710,000
Liabilities and Stockholders' Equity Accounts payable $85,200 Note payable 15,620 Capital stock, no par 523,980 Retained earnings85,200
Total liabilities and stockholders' equity$710,000
Explanation / Answer
1. a) What is the expected cash receipts from sales and the expected cash payments for merchandise purchases? (Omit the "$" signs in your response.)
Total cash receipts $240,000
Total cash payments $202,800
2. Compute the following for the month of May. (Hint: Prepare your answer using the layout of a Cash Budget.) (Deficiencies should be preceded by a minus sign when appropriate. Input all other amounts as positive values. Omit the "$" signs in your response.)
Total cash available $250,650
Total cash disbursements $253,040
Excess (deficiency) of receipts
over disbursements -$2,390
Total financing $24,000
Cash balance, ending $21,610
Workings :
Total Cash receipts
Beginning cash balance 10,650 + A/R (April) $71,000 + Cash sales $70,000 + Collection against May sales 1/2 of ($268,000 - $70,000) $99,000 = $250,650
Total Cash payments
Accounts payables (April) $85,200 + Inventory purchases $196,000 x 60% $117,600 + Selling & admin. expenses $34,000 + Note payables $15,620 + $600 $16,240 = $253,040