Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2462480 • 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:
204,000
327,450
64,250
327,450
Sales are budgeted at $253,000 for May. Of these sales, $75,900 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 $140,000 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 $93,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,850 for the month.
The note payable on the April 30 balance sheet will be paid during May, with $300 in interest. (All of the interest relates to May.)
During May, the company will borrow $25,400 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 Comanpy
Schedule of Expected Cash Collections
Collections on account receivable: ____________
April 30 balance ____________
May sales ____________
Total cash receipts $___________
Minden Comanpy
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.)
Minden Comanpy
Cash Budget
For the Month of May
Beg. cash balance _____________
Add collections from customers _____________
Total cash available _____________
Less cash disbursements:
Purchase of inventory _____________
Selling and administrative expenses _____________
Purchases of equipment _____________
Total cash disbursements _____________
Excess of cash available over disbursements _____________
Financing:
Borrowing-note _____________
Repayments- note _____________
Interest _____________
Total financing _____________
Ending cash balance _____________
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:
Explanation / Answer
Minden Company Schedule of Expected Cash Collections Total sales $ 2,53,000 Less: cash sales $ 75,900 Credit sales $ 1,77,100 Collected in the month of May (0.5 x 177100) $ 88,550 Cash sales $ 75,900 Collection of accounts receivable for April $ 58,000 Total cash collected $ 2,22,450 Minden Company Schedule of Expected Cash Disbursements April 30 accounts payable balance $ 67,000 Payment from May purchase (140000 x 40%) $ 56,000 Total Payment $ 1,23,000 Minden Company Cash Budget for May Beginning cash balance $ 17,200 Add: colection from customers $ 2,22,450 Total cash available $ 2,39,650 Less: cash disbursements Purchase of inventory $ 1,23,000 selling & administration expenses $ 93,000 Purchase of equipment $ 11,100 Total cash disbursements $ 2,27,100 Excess of cash available over disbursements 12,550 Financing: Borrowing of new note $ 25,400 Repayments- note $ (16,200) Interest $ (300) Total Financing $ 8,900 Ending cash balance $ 21,450 Minden Company Income statement for May Sales $ 2,53,000 Less: cost of goods sold Beginning inventory $ 48,250 add: purchase $ 1,40,000 $ 1,88,250 Less: ending inventory $ 47,000 $ 1,41,250 Gross Profit $ 1,11,750 Less: operating expenses Selling & administration expense $ 93,000 Depreciation $ 2,850 Interest $ 300 $ 96,150 Net Income $ 15,600 Minden Company Balance sheet as on 31, May Assets Cash $ 21,450 Accounts receivable $ 88,550 Inventory $ 47,000 Buildings and equipment, net of depreciation (11100+204000 - 2850) $ 2,12,250 Total Assets $ 3,69,250 Liability and Sytockholders' equity Accounts Payable (140000x60%) $ 84,000 Notes payable $ 25,400 Common Stock $ 1,80,000 Retained earnigs(64250+15600) $ 79,850 Total liabilities and stockholders’ equity $ 3,69,250