Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2449982 • 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:
228,000
363,200
95,550
363,200
Sales are budgeted at $227,000 for May. Of these sales, $68,100 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 $159,000 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 $79,500, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $6,000 for the month.
The note payable on the April 30 balance sheet will be paid during May, with $105 in interest. (All of the interest relates to May.)
During May, the company will borrow $25,100 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..
Minden Company
Schedule of Expected Cash Collections
Cash sales—May
Collections on account receivable:
April 30 balance
May sales
Total cash receipts
Minden Company
Schedule of Expected Cash Disbursements
April 30 accounts payable balance
May purchases
Total cash payments
Prepare a cash budget for May. (Cash deficiency, repayments and interest should be indicated by a minus sign.)
3)
Prepare a budgeted balance sheet as of May 31
Minden Company
Budgeted Balance Sheet
May 31
Assets
Total assets
Liabilities and Stockholders’ Equity
Total liabilities and stockholders’ equity
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of April 30 is given below:
Explanation / Answer
Minden Company Schedule of Expected Cash Collections Cash sales—May Collections on account receivable: April 30 balance 76250 May sales 147550 Total cash receipts 223800 Minden Company Schedule of Expected Cash Disbursements April 30 accounts payable balance 63750 May purchases 63600 Total cash payments 127350 Minden Company Cash Budget Beginning Cash Balance: 9200 Add Collections from customers: 223800 Total Cash Available: 233000 Less Cash disbursements: Purchase of inventory 127350 Selling and Administistive expenses 79500 Purchases of equipment 11800 Total Cash disbursements 218650 Excess of cash available over disbursements 14350 Financing Borrowing-note 25100 Repayments-Note -23900 interest -105 total financing 1095 ending cash balance 15445 Minden Company Budgeted Income Statement For the Months Ended May 31 Sales revenue 227,000 Cost of Good Sold Beginning Inventory 49750 Add : Purchase 159,000 Less : Ending Inventory 87500 Cost of Good Sold 121,250 Gross margin 105,750 Selling and administrative expenses: Selling and administrative expenses exl depreciation 79,500 Depreciation 6,000 85,500 Net operating income (loss) 20,250 Interest expense 105 Net income (loss) 20,145 Minden Company Budgeted Balance Sheet May 31 Assets Cash 15,445 Accounts receivable 79,450 Inventory 87,500 Buildings and equipment, net of depreciation 233,800 Total assets 416,195 Liabilities and Stockholders’ Equity Accounts payable 95,400 Note payable 25,100 Common stock 180,000 Retained earnings 115,695 Total liabilities and stockholders’ equity 416,195