Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2522306 • 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: Minden Company Balance Sheet April 30 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation $ 15,800 70,200 38,750 222,000 Total assets $ 346,750 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings $ 74,750 14,700 180,000 77,300 Total liabilities and stockholders' equity $ 346,750 The company is in the process of preparing a budget for May and has assembled the following data a. Sales are budgeted at $260,000 for May. Of these sales, $78,000 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 b. Purchases of inventory are expected to total $155,000 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 c. The May 31 inventory balance is budgeted at $59,500. d. Selling and administrative expenses for May are budgeted at $99,500, exclusive of depreciation. These e. The note payable on the April 30 balance sheet will be paid during May, with $460 in interest. (All of the f. New refrigerating equipment costing $11,000 will be purchased for cash during May expenses will be paid in cash. Depreciation is budgeted at $4,550 for the month interest relates to May.) g. During May, the company will borrow $21,500 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.Explanation / Answer
Minden Company
Cash Sales-May $ 78,000
Collection of accounts receivables:
April 30 balance $ 70,200
May Sales $ 91,000
1-a
Minden Company
April 30 accounts payable balance $ 74,750
May Purchases $ 62,000
Total Cash Payments $ 136,750
1-b
Minden Company
Beginning cash balance $ 15,800
Add Collection from Customers $ 161,200
(91,000+70,200)
Cash Sales $ 78,000
Total Cash Available $ 255,000
Less Cash disbursements:
Purchase of inventory -$62,000
Payments to Suppliers -$ 74,750
Selling and administrative expenses -$ 99,500
Purchase of Equipments -$ 11,000
Total cash disbursements -$ 247,250
Excess of cash available over disbursements $ 7,750
Financing:
Borrowing-Note $ 21,500
Repayments-Note -$ 14,700
Interest -$ 460
Total Financing $ 6,340
Ending Cash Balance $ 14,090
2 Budget Income statements for May:
Minden Company
Budgeted Income Statement For the month of May
Cost of Goods Sold:
Opening Inventory $ 38,750
Add: Purchases $ 155,000
Less: Closing inventory $ 59,500 $ 134,250
Sales during the month of May $ 260,000
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$ 125,750
Less: Selling and Admin Expenses $ 99,500
Depreciation $ 4,550
Interest Exp. $ 460
------------------------ $ 104,510
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Net Income $ 21,240
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3 Budgeted Balance Sheet as of May 30:
Minden Company
Balance Sheet For the month of May
Assets $
Cash 14,090
Accounts Receivable 91,000
Inventory 59,500
Building and equipments 228,450
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Total Assets 393,040
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Liabilities and Stockholder’s Equity $
Accounts Payable 93,000
Note Payable 21,500
Common Stock 180,000
Retained Earning 98,540
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Total Liabilities and Stockholder’s Equity 393,040
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Minden Company
Schedule of Expected Cash CollectionsCash Sales-May $ 78,000
Collection of accounts receivables:
April 30 balance $ 70,200
May Sales $ 91,000
Total Cash Receipts $ 239,200