Problem 8-18 Cash Budget; Income Statement; Balance Sheet; Changing Assumptions
ID: 2415020 • Letter: P
Question
Problem 8-18 Cash Budget; Income Statement; Balance Sheet; Changing Assumptions [LO8-2, LO8-4, LO8-8, LO8-9, LO8-10]
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of April 30 is given below:
Sales are budgeted at $220,000 for May. Of these sales, $60,000 will be for cash; the remainder will be credit sales. Each month’s credit sales are collected 60% in the month of sale and 40% in the month following the sale. All of the April 30 accounts receivable will be collected in May.
Purchases of inventory are expected to total $120,000 during May. These purchases will all be on account. The company pays for 50% of its merchandise purchases in the month of the purchase and the remaining 50% in the month following the purchase. All of the April 30 accounts payable to suppliers will be paid during May.
Selling and administrative expenses for May are budgeted at $72,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month.
The note payable on the April 30 balance sheet will be paid during May, with $100 in interest. (All of the interest relates to May.)
During May, the company will borrow $20,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.
Prepare a schedule of expected cash collections from sales and a schedule of expected cash disbursements for merchandise purchases..
Prepare a cash budget for May. (Cash deficiency, repayments and interest should be indicated by a minus sign.)
Prepare a budgeted income statement for May.
Prepare a budgeted balance sheet as of May 31.
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:
a.
Sales are budgeted at $220,000 for May. Of these sales, $60,000 will be for cash; the remainder will be credit sales. Each month’s credit sales are collected 60% in the month of sale and 40% in the month following the sale. All of the April 30 accounts receivable will be collected in May.
b.Purchases of inventory are expected to total $120,000 during May. These purchases will all be on account. The company pays for 50% of its merchandise purchases in the month of the purchase and the remaining 50% in the month following the purchase. All of the April 30 accounts payable to suppliers will be paid during May.
c. The May 31 inventory balance is budgeted at $40,000. d.Selling and administrative expenses for May are budgeted at $72,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month.
e.The note payable on the April 30 balance sheet will be paid during May, with $100 in interest. (All of the interest relates to May.)
f. New refrigerating equipment costing $6,500 will be purchased for cash during May. g.During May, the company will borrow $20,000 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.)
Prepare a budgeted income statement for May.
3.Prepare a budgeted balance sheet as of May 31.
Minden Company Balance Sheet April 30 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation $ 9,000 54.000 30,000 207,000 Total assets $ 300,000 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings 63,000 14,500 180,000 42,500 Total liabilities and stockholders' equity $300,000Explanation / Answer
Answer:1-a
Answer:1-b
Answer:2
Answer:3
Schedule of Expected cash collections Cash sales-May 60000 Collections on accounts receivable: April 30 balance 54000 May sales 96000 Total cash receipts 210000 Schedule of expected cash disbursement April 30 Accounts payable balance 63000 May Purchases 60000 Total cash Payments 123000