Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2557491 • 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 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.Explanation / Answer
Answer
Cash Sales - May
71400
Collection on Accounts receivables:
April 30 balance
76000
May Sales
83300
Total cash receipts
230700
April 30 A/P balance
80250
May Purchase
49600
Total cash payments
129850
Beginning Cash Balance
18000
Add: Collections from customers
230700
Total cash available
248700
Less: Cash disbursements
Purchase of Inventory
129850
Selling & Administrative expenses
86100
purchase of Equipment
15100
Total cash disbursements
231050
Excess of cash available
17650
Financing:
Borrowing-Note
23800
Repayments-Note
-13200
Interest
-400
Total Financing
10200
Ending cash balance
27850
Sales Revenue
238000
Cost of Goods Sold:
Beginning Inventory
32500
Purchases
124000
Goods available for sale
156500
Ending Inventory
24000
Cost of Goods Sold
132500
Gross Profits
105500
Selling & Depreciation expenses
90550
Operating Profits
14950
Interest expense
400
Net Income
14550
Amount as at 31 May
Cash
27850
Accounts receivables
83300
Inventory
24000
Building & Equipment, net of depreciation
253650
Total Assets
388800
Accounts Payable
74400
Notes payable
23800
Common Stock
180000
Retained Earnings
110600
Total Liabilities & Equity
388800
Cash Sales - May
71400
Collection on Accounts receivables:
April 30 balance
76000
May Sales
83300
Total cash receipts
230700