Minden Company is a wholesale distributor of premium European chocolates. The co
ID: 341026 • 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 $ 16,500 67,000 32,000 249,000 Total assets $364,500 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings $ 68,750 20,500 180,000 95,250 Total liabilities and stockholders' equity $364,500 The company is in the process of preparing a budget for May and has assembled the following data a. 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 b. 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 c. The May 31 inventory balance is budgeted at $86,000 d. Selling and administrative expenses for May are budgeted at $76,200, exclusive of depreciation. These e. The note payable on the April 30 balance sheet will be paid during May, with $170 in interest. (All of the f. New refrigerating equipment costing $6,600 will be purchased for cash during May expenses will be paid in cash. Depreciation is budgeted at $5,300 for the month interest relates to May.) g. 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 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
Schedule of expected cash collection
cash sales- may
72300
collection of accounts receivables
151350
April 30 balance
67000
may sales=(241000-72300)*1/2
84350
total cash receipt
223650
Schedule of expected cash disbursement
april 30 accounts payable balance
68750
May purchase
191000*40%
76400
total cash payment
145150
beginning cash balance
16500
add collection of cash
223650
total cash available
240150
less cash disbursement
purchase of inventory
145150
selling and administrative expense
76200
purchase of equipment
6600
total cash disbursement
227950
excess of cash available over disbursement
12200
financing
borrowing note
27000
repayment note
-20500
interest
-170
total financing
6330
ending cash balance
18530
income statement
sales
241000
less cost of goods sold
137000
opening inventory
32000
purchase of inventory
191000
less closing inventory
-86000
gross profit
104000
depreciation
5300
selling and aministrative expenses
76200
operating profit
22500
less interest
170
net profit
22330
Balance sheet
Assets
cash
18530
accounts receivables
84350
inventory
86000
building and equipment net
250300
total assets
439180
liabilities and stockholders equity
accounts payable
76400
114600
notes payable
27000
common stock
180000
retained earning
95250+22330
117580
total of liabilities and shareholders
439180
Schedule of expected cash collection
cash sales- may
72300
collection of accounts receivables
151350
April 30 balance
67000
may sales=(241000-72300)*1/2
84350
total cash receipt
223650
Schedule of expected cash disbursement
april 30 accounts payable balance
68750
May purchase
191000*40%
76400
total cash payment
145150
beginning cash balance
16500
add collection of cash
223650
total cash available
240150
less cash disbursement
purchase of inventory
145150
selling and administrative expense
76200
purchase of equipment
6600
total cash disbursement
227950
excess of cash available over disbursement
12200
financing
borrowing note
27000
repayment note
-20500
interest
-170
total financing
6330
ending cash balance
18530
income statement
sales
241000
less cost of goods sold
137000
opening inventory
32000
purchase of inventory
191000
less closing inventory
-86000
gross profit
104000
depreciation
5300
selling and aministrative expenses
76200
operating profit
22500
less interest
170
net profit
22330
Balance sheet
Assets
cash
18530
accounts receivables
84350
inventory
86000
building and equipment net
250300
total assets
439180
liabilities and stockholders equity
accounts payable
76400
114600
notes payable
27000
common stock
180000
retained earning
95250+22330
117580
total of liabilities and shareholders
439180