Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2556340 • 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 $ 18,000 76,000 32,500 243,000 Total assets $ 369,500 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings $ 80,250 13,200 180,000 96,050 Total liabilities and stockholders' equity $ 369,500 The company is in the process of preparing a budget for May and has assembled the following data a. Sales are budgeted at $238,000 for May. Of these sales, $71,400 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 $124,000 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 $24,000 d. Selling and administrative expenses for May are budgeted at $86,100, exclusive of depreciation. These e. The note payable on the April 30 balance sheet will be paid during May, with $400 in interest. (All of the g. During May, the company will borrow $23,800 from its bank by giving a new note payable to the bank for expenses will be paid in cash. Depreciation is budgeted at $4,450 for the month interest relates to May.) f. New refrigerating equipment costing $15,100 will be purchased for cash during May. that amount. The new note will be due in one year. equired 1-a. Prepare a schedule of expected cash collections from sales and a schedule of expected cash disbursements for merchandise purchases.. Minden Company Schedule of Expected Cash Collections Cash sales-May Collections on account receivable April 30 balance May sales Total cash receipts Minden Company Schedule of Expected Cash Disbursements April 30 accounts payable balance May purchases Total cash paymentsExplanation / Answer
Note :
1) Calculation of retained earning in the month of may
opening 96050
Add: Profit during the period 14550
Retained earning in may 110600
Profit during the period ==238000-132500-86100-400-4450= $14550
2) Building and equipment
Op Bal $243000
Add :Purchase $15100
Less : Dep $4450
Ending Balance $253650
Maiden Company Schedule of expected cash Collection Cash Sale - May 71400 Collection on account receivable April 30 Balance 76000 May Sales 83300 Total Cash Receipt 230700 Maiden Company Schedule of expected cash Disbursements April 30 Account are payable balance 80250 May Purchase 49600 Total Cash payment 129850 Maiden Company Maiden Company cash budget for the month of may Beginning cash balance 18000 Add: Collection from customer 230700 Total Cash Available (A) 248700 Less: Cash disbursement Purchase of inventory 129850 Selling and administration overhead 86100 Purchase of equipment 15100 Total Cash disbursment (B) 231050 Excess of cash available over disbursment ©= (A)-(B) 17650 Financing Barrowing-note 23800 Repayment Note 13200 Interest 400 Total financing (D) 10200 Ending Cash Balance (C)+(D) 27850 Maiden Company Maiden Company Budgeted Balance Sheet May-31 Assets Cash 27850 Account Receivable 83300 Inventory 24000 Building and equipment net of depreciation 253650 Total Assets 388800 Liabilities and Stock holders equity Account Payable 74400 Note Payable 23800 Common Stock 180000 Reained Earning 110600 Total Liabilities and stock holder equity 388000