Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2569916 • 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 Balance Sheet Assets Accounts receivable Inventory Buildings and equipment, net of depreciation 18,700 70,250 41,250 230,000 Total assets $ 360 200 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings $ 72.250 13,700 180,000 94.250 Total labilities and stockholders' equity 360,200 The company is in the process of preparing a budget for May and has assembled the following data a. Sales are budgeted at $214,000 for May Of these sales, $64 200 will be for cash, the remainder wil be b. Purchases of inventory are expected to tatal $122,000 during May These purchases will all be on c. The May 31 inventory balance is budgeted at $47,500 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 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 d. Selling and administrative expenses for May are budgeted at $85,500, exclusive of depreciation These The nofe payable othe bane shewi be paid ing May, with $3s0 in nerest (All of he interest relates to May) New refrigerating equipment costing $16 300 will be purchased for cash during May 9 During May the company will borrow $24,500 from its bank by giving a new note payable to the bank for that amount. The new noto will be du e in one year Required: 1-a Prepare a schedule of expected cash collections from sales and a schedule of expocted cash disbursements for merchandise purchases Minden Company Schedule of Expected Cash Collections Colections on account receivable Apri 30 balance May sales Total cash receiptsExplanation / Answer
Schedule of cash receipts:
Cash sales—May...........................................
$64,200
Collections on account receivable:
April 30 balance..........................................
70,250
May sales (50% × $149,800)........................
74,900
Total cash receipts.........................................
$209,350
Schedule of cash payments for purchases:
April 30 accounts payable balance...................
$72,250
May purchases (40% × $122,000)...................
48,800
Total cash payments......................................
$121,050
Minden Company
Cash Budget
For the Month of May
Beginning cash balance..................................
$ 18,700
Add collections from customers (above)...........
209,350
Total cash available........................................
228,050
Less cash disbursements:
Purchase of inventory (above)......................
121,050
Selling and administrative expenses..............
85,500
Purchases of equipment..............................
16,300
Total cash disbursements...............................
222,850
Excess of cash available over disbursements....
5,200
Financing:
Borrowing—note.........................................
24,500
Repayments—note......................................
(13,700)
Interest......................................................
(390)
Total financing...............................................
10,410
Ending cash balance......................................
$ 15,610
Minden Company
Budgeted Income Statement
For the Month of May
Sales....................................................
$214,000
Cost of goods sold:
Beginning inventory............................
$41,250
Add purchases....................................
122,000
Goods available for sale.......................
163,250
Ending inventory.................................
47,500
Cost of goods sold.................................
115,750
Gross margin........................................
98,250
Selling and administrative expenses ($85,500 + $2,050)..............................................
87,550
Net operating income.............................
10,700
Interest expense...................................
390
Net income...........................................
$10,310
Minden Company
Budgeted Balance Sheet
May 31
Assets
Cash.............................................................
$ 15,610
Accounts receivable (50% × $149,800).............
74,900
Inventory......................................................
47,500
Buildings and equipment, net of depreciation ($230,000 + $16,300 – $2,050)......................
244,250
Total assets....................................................
$382,260
Liabilities and Stockholders’ Equity
Accounts payable (60% × 122,000)..................
$ 73,200
Note payable.................................................
24,500
Capital stock..................................................
180,000
Retained earnings ($94,250 + $10,310).............
104,560
Total liabilities and stockholders’ equity.............
$382,260
Cash sales—May...........................................
$64,200
Collections on account receivable:
April 30 balance..........................................
70,250
May sales (50% × $149,800)........................
74,900
Total cash receipts.........................................
$209,350
Schedule of cash payments for purchases:
April 30 accounts payable balance...................
$72,250
May purchases (40% × $122,000)...................
48,800
Total cash payments......................................
$121,050
Minden Company
Cash Budget
For the Month of May
Beginning cash balance..................................
$ 18,700
Add collections from customers (above)...........
209,350
Total cash available........................................
228,050
Less cash disbursements:
Purchase of inventory (above)......................
121,050
Selling and administrative expenses..............
85,500
Purchases of equipment..............................
16,300
Total cash disbursements...............................
222,850
Excess of cash available over disbursements....
5,200
Financing:
Borrowing—note.........................................
24,500
Repayments—note......................................
(13,700)
Interest......................................................
(390)
Total financing...............................................
10,410
Ending cash balance......................................
$ 15,610