Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 2745415 • 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:
249,000
364,500
95,250
364,500
Sales are budgeted at $241,000 for May. Of these sales, $72,300 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.
Purchases of inventory are expected to total $191,000 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.
Selling and administrative expenses for May are budgeted at $76,200, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $5,300 for the month.
The note payable on the April 30 balance sheet will be paid during May, with $170 in interest. (All of the interest relates to May.)
During May, the company will borrow $27,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.
Prepare a schedule of expected cash collections from sales and a schedule of expected cash disbursements for merchandise purchases..
Prepare a cash budget for May. (Cash deficiency, repayments and interest should be indicated by a minus sign.)
Prepare a budgeted balance sheet as of May 31.
Minden CompanyBalance Sheet
April 30 Assets Cash $ 16,500 Accounts receivable 67,000 Inventory 32,000 Buildings and equipment, net of depreciation
249,000
Total assets $364,500
Liabilities and Stockholders’ Equity Accounts payable $ 68,750 Note payable 20,500 Common stock 180,000 Retained earnings95,250
Total liabilities and stockholders’ equity $364,500
Explanation / Answer
CREDIT SALES:
Cash Collection For May = ( 241000 - 72300) * 1/2 = $ 84350
Accounts Recievable = ( 241000 - 72300) * 1/2 = $ 84350
CREDIT PURCHASES:
Cash Paid = $ 191000 * 40% = $ 76400
Accounts Payable = $ 191000 * 60% = $ 114600
BUILDING & EQUIPMENT MONTH END BALANCE = 249000 + 6600 -5300 =$ 250300
RETAINED EARNINGS MONTH END BALANCE = 95250 + 22330 = $ 117580
ANSWER 1A:
$ 1,45,150.00
ANSWER 1B:-
ANSWER 2:
ANSWER 3:-
SCHEDULE OF EXPECTED CASH COLLECTIONS Cash Sales for May $ 72,300.00 Credit Sales for May $ 84,350.00 Accounts Recievable - April $ 67,000.00 Total Cash Reciepts $ 2,23,650.00 SCHEDULE OF EXPECTED CASH DISBURSEMENTS Credit Purchases - May $ 76,400.00 Accounts Payable- April $ 68,750.00 Total Cash Payments$ 1,45,150.00