Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2401736 • 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:
The company is in the process of preparing a budget for May and has assembled the following data:
Sales are budgeted at $220,000 for May. Of these sales, $66,000 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 $128,000 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.
The May 31 inventory balance is budgeted at $56,000.
Selling and administrative expenses for May are budgeted at $86,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $6,750 for the month.
The note payable on the April 30 balance sheet will be paid during May, with $565 in interest. (All of the interest relates to May.)
New refrigerating equipment costing $6,700 will be purchased for cash during May.
During May, the company will borrow $25,300 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.
Prepare a budgeted balance sheet as of May 31.
Balance Sheet
April 30 Assets Cash $ 11,400 Accounts receivable 75,000 Inventory 41,000 Buildings and equipment, net of depreciation 224,000 Total assets $ 351,400 Liabilities and Stockholders’ Equity Accounts payable $ 70,000 Note payable 15,500 Common stock 180,000 Retained earnings 85,900 Total liabilities and stockholders’ equity $ 351,400
Explanation / Answer
Minden Company
Budgeted Balance Sheet
May 31
Assets
Cash
$ 24,735.00
Accounts receivables
$ 77,000.00
Inventory
$ 56,000.00
Building and Equipment (net)
$ 223,950.00
Total Assets
$ 381,685.00
Liabilities and Shareholder's equity
Accounts Payable
$ 76,800.00
Notes payable
$ 25,300.00
Common Stock
$ 180,000.00
Retained earnings
$ 99,585.00*
Total Liabilities and Shareholder's equity
$ 381,685.00
*$ 85900+profit $ 13685
Working notes
Cash Budget for May
Beginning cash balance
$ 11,400.00
Cash Sales
$ 66,000.00
Cash collections for current month sales
$ 77,000.00
Cash collections for Previous month sales month sales
$ 75,000.00
Loan from bank
$ 25,300.00
Total Cash available
$ 254,700.00
Cash Disbursements
Payment for Current month Purchase
$ 51,200.00
Payment for Previous month Purchase
$ 70,000.00
Selling and Administrative expenses
$ 86,000.00
payment of Notes Payable
$ 15,500.00
Payment of interest on note payable
$ 565.00
Purchase of Equipment
$ 6,700.00
Total Cash Disbursements
$ 229,965.00
Ending Cash Balance
$ 24,735.00
Minden Company
Budgeted Income Statement
May 31
Sales
$ 220,000.00
Cost of Goods sold
$ 113,000.00
Gross profit
$ 107,000.00
Selling and Administrative expenses
$ 92,750.00
Interest Expense
$ 565.00
Net Profit
$ 13,685.00
Assumptions: It is Assumed that note of $ 25300 is taken at the end of may and depreciation given is including depreciation on new equipment.
Minden Company
Budgeted Balance Sheet
May 31
Assets
Cash
$ 24,735.00
Accounts receivables
$ 77,000.00
Inventory
$ 56,000.00
Building and Equipment (net)
$ 223,950.00
Total Assets
$ 381,685.00
Liabilities and Shareholder's equity
Accounts Payable
$ 76,800.00
Notes payable
$ 25,300.00
Common Stock
$ 180,000.00
Retained earnings
$ 99,585.00*
Total Liabilities and Shareholder's equity
$ 381,685.00