Minden Company is a wholesale distributor of premium European chocolates. The sh
ID: 2557055 • Letter: M
Question
Minden Company is a wholesale distributor of premium European chocolates. The sheet as of April 30 is given below company's balance 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 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 expenses will be paid in cash. Depreciation is budgeted at $4,450 for the month e. The note payable on the April 30 balance sheet will be paid during May, with $400 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $15,100 will be purchased for cash during May g. During May, the company will borrow $23,800 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-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 71,400 Cash sales-May Collections on account receivable April 30 balance May sales 76,000 ...83.300 S 230,700 Total cash receipts Minden Company Schedule of Expected Cash Disbursements April 30 accounts payable balance 80,250 49,600 S 129,850 May purchases Total cash paymentsExplanation / Answer
M company Schedule of cash collections Particulars Amount Amount cash sales 71400 collection of accounts receivable 76000 cash from may credit sales ((238000-71400)/2) 83300 Total cash receipts 230700 Schedule of cash disbursements Particulars Amount Amount payment of outstanding balance 80250 payment of may credit purchases (124000*40%) 49600 Total Cash disbursements 129850 M company cash Budget for the month of May Particulars Amount Amount Beginning cash balance 18000 Add: cash collection 230700 Total cash available 248700 Less: Cash disbursements For merchandise 129850 For selling and administrative expenses 86100 For equipment 15100 Total cash disbursements 231050 Excess ( deficiency) of cash 17650 Financing Borrowing 23800 repayment -13200 Interest -400 Ending cash balance 27850 M company Budgeted Income Statement For the month ended May Particluars Amount Budgeted sales 238000 less:cost of goods sold (32500+124000-24000) 132500 Gross profit 105500 less: Selling and adminisrative expenses 86100 Depreciation 4450 Interest 400 Net Income 14550 M company Budgeted Balance Sheet As at May 31 Particluars Amount Current Assets: Cash 27850 Accounts receivable 83300 Inventory 24000 Total Current Assets 135150 Add:Building equipment, net (243000+15100-4450) 253650 Total Assets 388800 Labilities and Equity Accounts payable (124000*60%) 74400 Notes Payable 23800 Capital Stock 180000 Retained earnings (96050+14550) 110600 Total Liabilities and stockholders equity 388800 0