Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2452771 • 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:
238,000
359,100
91,700
359,100
Sales are budgeted at $255,000 for May. Of these sales, $76,500 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 $189,000 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 $93,600, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $6,250 for the month.
The note payable on the April 30 balance sheet will be paid during May, with $370 in interest. (All of the interest relates to May.)
During May, the company will borrow $29,500 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..
!a. Prepare a schedule of expected cash collections from sales and a schedule of expected cash disbursements for merchandise purchases..
2.Prepare a budgeted income statement for May using the absorption costing income statement format
3. Prepare a budgeted balance sheet as of May 31.
Minden CompanyBalance Sheet
April 30 Assets Cash $ 11,100 Accounts receivable 72,500 Inventory 37,500 Buildings and equipment, net of depreciation
238,000
Total assets $359,100
Liabilities and Stockholders’ Equity Accounts payable $ 68,000 Note payable 19,400 Common stock 180,000 Retained earnings91,700
Total liabilities and stockholders’ equity $359,100
Explanation / Answer
Minden Company is a wholesale distributor of premium European chocolates. The co