Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2557438 • 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 $ 18,500 58,500 40,750 202,000 Total assets $ 319,750 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings $67,750 15,800 180,000 56,200 Total liabilities and stockholders' equity $ 319,750 The company is in the process of preparing a budget for May and has assembled the following data a. Sales are budgeted at $263,000 for May. Of these sales, $78,900 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 $193,000 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 $63,000 d. Selling and administrative expenses for May are budgeted at $73,200, exclusive of depreciation. These e. The note payable on the April 30 balance sheet will be paid during May, with $210 in interest. (All of the f. New refrigerating equipment costing $11,900 will be purchased for cash during May expenses will be paid in cash. Depreciation is budgeted at $4,650 for the month interest relates to May.) g. During May, the company will borrow $27,200 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year 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 Cash sales-May Collections on account receivable April 30 balance May sales Total cash receiptsExplanation / Answer
Answer
Cash Sales - May
78900
[given]
Collection on Accounts receivables:
April 30 balance
58500
[given]
May Sales
92050
[(263000-78900) x 50%]
Total cash receipts
$229450
April 30 A/P balance
67750
May Purchase
77200
Total cash payments
$144950
Beginning Cash Balance
18500
Add: Collections from customers
229450
Total cash available
247950
Less: Cash disbursements
Purchase of Inventory
144950
Selling & Administrative expenses
73200
purchase of Equipment
11900
Total cash disbursements
230050
Excess of cash available
17900
Financing:
Borrowing-Note
27200
Repayments-Note
-15800
Interest
-210
Total Financing
11190
Ending cash balance
$29090
Sales Revenue
263000
Cost of Goods Sold:
Beginning Inventory
40750
Purchases
193000
Goods available for sale
233750
Ending Inventory
63000
Cost of Goods Sold
170750
Gross Profits
$92250
Selling & Depreciation expenses
77850
Operating Profits
$14400
Interest expense
210
Net Income
$14190
Amount as at 31 May
Cash
29090
Accounts receivables
92050
Inventory
63000
Building & Equipment, net of depreciation
209250
Total Assets
$393,390
Accounts Payable
115800
Notes payable
27200
Common Stock
180000
Retained Earnings
70390
Total Liabilities & Equity
$393,390
Cash Sales - May
78900
[given]
Collection on Accounts receivables:
April 30 balance
58500
[given]
May Sales
92050
[(263000-78900) x 50%]
Total cash receipts
$229450