Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2420364 • 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:
243,000
369,500
96,050
369,500
Sales are budgeted at $238,000 for May. Of these sales, $71,400 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 $124,000 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.
Selling and administrative expenses for May are budgeted at $86,100, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $4,450 for the month.
The note payable on the April 30 balance sheet will be paid during May, with $400 in interest. (All of the interest relates to May.)
During May, the company will borrow $23,800 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of April 30 is given below:
Required: 1-a. Prepare a schedule of expected cash collections from sales and a schedule of expected cash Schedule of Expected Cash Collections Cash sales-May Collections on account receivable: April 30 balance May sales Total cash receipts Schedule of Expected Cash Disbursements April 30 accounts payable balance May purchases Total cash payments 0Explanation / Answer
Particulars Amount (in $) May Schedule of Expected Cash Collections Cash Sales - May 71400.00 Collections on account receivable: April 30 balance 76000.00 May sales 83300.00 Total Cash Receipts 230700.00 Schedule of Expected Cash Disbursements April 30 accounts payable balance 80250.00 May purchases 49600.00 Total cash payments 129850.00 1.b Cash Budget for the month of May Amount (in $) Beginning cash balance 18000.00 Add: collections from customers 230700.00 Total Cash available 248700.00 Less: cash disbursements Purchase of inventory 129850.00 Selling & Administrative expenses 86100.00 Purchases of equipment 15100.00 Total cash disbursements 231050.00 Excess of cash available over disbursements 17650.00 Financing: Borrowing-note 23800.00 Repaments-note 13200.00 Interest 400.00 Total Financing 10200.00 Ending cash balance 27850.00 2. Budgeted Income Statement for the month of May Amount (in $) Sales 238000.00 Less: Cost of goods sold 132500.00 Opening Inventory $32500.00 Add: Purchases $124000.00 Less: Closing Stock $24000.00 Gross Profit 105500.00 Less: Selling and administrative expenses 86100.00 Depreciation 4450.00 Interest 400.00 Net Profit 14550.00 3. Budgeted Balance Sheet as on 31st May Amount (in $) Assets Cash 27850.00 Accounts receivable 83300.00 Inventory 24000.00 Buildings and equipment, net of depreciation 253650.00 Total assets 388800.00 Liabilities and Stockholders’ Equity Accounts payable 74400.00 Note payable 23800.00 Common stock 180000.00 Retained earnings 110600.00 Total liabilities and stockholders’ equity 388800.00