Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2555555 • Letter: M
Question
Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet on April 30 is as follows MINDEN COMPANY Balance Sheet April 30 Assets Cash Accounts receivable, customers Inventory Buildings and equipment, net of $ 15,400 62,000 34,800 239,000 depreciation Total assets $351,200 Liabilities and Shareholders' Equity Accounts payable, suppliers Note payable Capital shares, no par Retained earnings $ 72,600 17,700 212,000 48,900 Total liabilities and shareholders' equity $351,200 The company is in the process of preparing budget data for May. A number of budget items have already been prepared, as follows a. Sales are budgeted at $520,000 for May. Of these sales, $156,000 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 are collected in the following month. All of the April 30 receivables will be collected in May. b. Purchases of inventory are expected to total $312,000 during May. These purchases will all be on account 40% 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 $104,000 d. Operating expenses for May are budgeted at $187,200, exclusive of depreciation. These expenses e. The note payable on the April 30 balance sheet will be paid during May, with $100 in interest. (All of f. New refrigerating equipment costing $9,700 will be purchased for cash during May. will be paid in cash. Depreciation is budgeted at $5,200 for the month. the interest relates to May.) g. During May, the company will borrow $52,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year. Required 1. Prepare a cash budget for May. (Any "Repayments" and "Interest" should be indicated by a minus sign.)Explanation / Answer
Cash Budget.
$
Opening Cash Balance
15,400
Total Cash Collected
400,000
Total Cash Available
415,400
Deduct Disbursement
Payment on purchases
197,400
Operating Expenses
187,200
Note paid with interest
17,800
Purchase of New Equipment
9,700
Total Cash Disbursement
-412,100
Excess of Revenue over Disbursement
181,000
Note payable
52,000
Total Financing
5,2000
55,300
Budgeted income statement
Revenue
520000
Cost of Goods Sold
Purchase
312000
Beginning Inventory
34800
Available For Sales
346800
Closing Inventory
104000
Cost of Goods Sold
-242,800
Gross profit
272,000
operating Expense
-192,400
Operating Profit
79,600
Interest Expense
-100
Net Profit
84,700
Balance Sheet
Asset
$
Cash
55,300
Accounts Receivable
182,000
Inventory
104,000
Net of Building And Equipments
243,500
Total Asset
584,800
Liability An shareholders equity
Accounts Payable
187,200
Note payable
52,000
Capital share no Par
212,000
Retained Earnings
133,600
584,800
Workings
Cash Collection.
Previous Accents Receivable
62,000
Current month cash sale
156,000
Portion of current month credit sale = (520000-156000)*50%
182,000
400,000
Cash Disbursement on purchase
Previous month Accounts payable
72,600
Current month payment purchase 312000*40%
124,800
196,800
$
Opening Cash Balance
15,400
Total Cash Collected
400,000
Total Cash Available
415,400
Deduct Disbursement
Payment on purchases
197,400
Operating Expenses
187,200
Note paid with interest
17,800
Purchase of New Equipment
9,700
Total Cash Disbursement
-412,100
Excess of Revenue over Disbursement
181,000
Note payable
52,000
Total Financing
5,2000
55,300