Problem 8-19 Cash Budget; Income Statement; Balance Sheet [L08-2, LO8-4, LO8-8,
ID: 2553473 • Letter: P
Question
Problem 8-19 Cash Budget; Income Statement; Balance Sheet [L08-2, 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 14,500 72,750 31,750 209,000 $328,000 Liabilities and Stockholders Equity Accounts payable Note payable Common stock Retained earnings 69, 5ee 16,000 180,000 62.500 Total liabilities and stockholders' equity $328,000 The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $247,000 for May. Of these sales, $74,100 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 recelvable will be collected in May. b. Purchases of inventory are expected to total $172.000 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 payableExplanation / Answer
M company Schedule of cash collections Particulars Amount Amount cash sales 74100 collection of accounts receivable 72750 cash from may credit sales ((247000-74100)/2) 86450 Total cash receipts 233300 Schedule of cash disbursements Particulars Amount Amount payment of outstanding balance 69500 payment of may credit purchases (172000*40%) 68800 Total Cash disbursements 138300 M company cash Budget for the month of May Particulars Amount Amount Beginning cash balance 14500 Add: cash collection 233300 Total cash available 247800 Less: Cash disbursements For merchandise 138300 For selling and administrative expenses 87600 For equipment 13400 Total cash disbursements 239300 Excess ( deficiency) of cash 8500 Financing Borrowing 22900 repayment -16000 Interest -385 Ending cash balance 15015 M company Budgeted Income Statement For the month ended May Particluars Amount Budgeted sales 247000 less:cost of goods sold (31750+172000-58500) 145250 Gross profit 101750 less: Selling and adminisrative expenses 87600 Depreciation 6850 Interest 385 Net Income 6915 M company Budgeted Balance Sheet As at May 31 Particluars Amount Current Assets: Cash 15015 Accounts receivable 86450 Inventory 58500 Total Current Assets 159965 Add:Building equipment, net (209000+13400-6850) 215550 Total Assets 375515 Labilities and Equity Accounts payable (172000*60%) 103200 Notes Payable 22900 Capital Stock 180000 Retained earnings (62500+6915) 69415 Total Liabilities and stockholders equity 375515