Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2557023 • 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 Accounts receivable Inventory Buildings and equipment, net of depreciation $ 10,300 70,000 43,000 227,000 Total assets 350,300 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings $86,000 23,000 180,000 61,300 Total liabilities and stockholders' equity 350,300 The company is in the process of preparing a budget for May and has assembled the following data a. Sales are budgeted at $276,000 for May. Of these sales, $82,800 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 $147,000 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 $43,000 d. Selling and administrative expenses for May are budgeted at $97,500, exclusive of depreciation. These e. The note payable on the April 30 balance sheet will be paid during May, with $235 in interest. (All of the f. New refrigerating equipment costing $12,100 will be purchased for cash during May. expenses will be paid in cash. Depreciation is budgeted at $3,200 for the month interest relates to May.) g. During May, the company will borrow $29,200 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
M company Schedule of cash collections Particulars Amount Amount cash sales 82800 collection of accounts receivable 70000 cash from may credit sales ((276000-82800)/2) 96600 Total cash receipts 249400 Schedule of cash disbursements Particulars Amount Amount payment of outstanding balance 86000 payment of may credit purchases (147000*40%) 58800 Total Cash disbursements 144800 M company cash Budget for the month of May Particulars Amount Amount Beginning cash balance 10300 Add: cash collection 249400 Total cash available 259700 Less: Cash disbursements For merchandise 144800 For selling and administrative expenses 97500 For equipment 12100 Total cash disbursements 254400 Excess ( deficiency) of cash 5300 Financing Borrowing 29200 repayment -23000 Interest -235 Ending cash balance 11265 M company Budgeted Income Statement For the month ended May Particluars Amount Budgeted sales 276000 less:cost of goods sold (43000+147000-43000) 147000 Gross profit 129000 less: Selling and adminisrative expenses 97500 Depreciation 3200 Interest 235 Net Income 28065 M company Budgeted Balance Sheet As at May 31 Particluars Amount Current Assets: Cash 11265 Accounts receivable 96600 Inventory 43000 Total Current Assets 150865 Add:Building equipment, net (227000+12100-3200) 235900 Total Assets 386765 Labilities and Equity Accounts payable (147000*60%) 88200 Notes Payable 29200 Capital Stock 180000 Retained earnings (61300+28065) 89365 Total Liabilities and stockholders equity 386765