Problem 8-19 Cash Budget; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-8,
ID: 2508965 • Letter: P
Question
Problem 8-19 Cash Budget; Income Statement; Balance Sheet [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 Minden Company Balance Sheet April 30 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets 9,000 54,e00 30,000 207,e00 $3e0,eee Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings 63,e0e 14, 5e0 180,000 2,500- Total liabilities and stockholders' equity $300, ee0 The company is in the process of preparing a budget for May and has assembled the following data a. Sales are budgeted at $200,000 for May. Of these sales, $60,000 will be for cash; the remainder will be credit sales. One-half of a b. Purchases of inventory are expected to total $120,000 during May. These purchases will all be on account. Forty percent of all 2 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 are paid for in the month of purchase; the remainder are paid in the following month. All of the April 30 accounts payableExplanation / Answer
Expected Cash Collections May Budgeted Sales 200000 Cash Sales 60000 Credit Sales: April Sales 54000 May Sales 70000 Total Collections 184000 Accounts Receivable 70000 Expected cash disbursements May Budgeted Purchases 120000 Payments for April 63000 May 48000 Payments for purchases 111000 Accounts Payable 72000 MINDEN COMPANY Cash Budget For May Beginning Balance 9000 Collections from sales 184000 Cash Available for disbursements 193000 Cash Disbursements: Purchases 111000 Selling and administrative exp. 72000 Purchase of equipment 6500 Total cash payments 189500 Cash surplus / (Deficit 3500 Financing : Borrowing 20000 Repayments -14500 Interest -100 Total Financing 5400 Ending Cash Balance 8900 MINDEN COMPANY Income Statement for May Sales 200000 Cost of goods sold: Beginning Inventory 30000 add: Purchases 120000 150000 Less: Ending Inventory 40000 Cost of goods sold 110000 Gross Profit 90000 Expenses: Selling administrative expenses 72000 Depreciation 2000 Interest 100 Total Expenses 74100 Net Income 15900 MINDEN COMPANY Balance Sheet as at May 31 Assets Cash 8900 Accounts Receivable 70000 Inventory 40000 Building and equipment, net of 211500 depreciation Total Assets 330400 Liabilities and Stockholders' Equity Accounts Payable 72000 Note Payable 20000 Total Liabilities 92000 Common Stock 180000 Retained Earnings Balance as at May 1 42500 Net income 15900 Balance as at May 31 58400 Total Stockholders' Equity 238400 Total Liabilities and Stockholders' Equity 330400