alue 0.00 points Minden Company is a wholesale distributor of premium European c

Question

alue 0.00 points 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 $ 9,600 54,750 53,750 214,000 , net of depreciation Total assets $332,100 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings $ 70,500 18,100 180,000 63.500 Total liabilities and stockholders' equity $ 332,100 The company is in the process of preparing a budget for May and has assembled the following data a. Sales are budgeted a $257,000 for May. Of these sales, $77,100 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 $121,000 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 pay able to suppliers will be paid during May c. The May 31 inventory balance is budgeted at $31,000 d. Selling and administrative expenses for May are budgeted at $83,700, exclusive of depreciation. These e. The note payable on the April 30 balance sheet will be paid during May, with $340 in interest. (All of the f. New refrigerating equipment costing $13,100 will be purchased for cash during May expenses will be paid in cash. Depreciation is budgeted at $2,800 for the month interest relates to May.) g. Duing May, the company will borrow $22,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.

Explanation / Answer

minden company schdule for expected cash collection cash sales-may 77100 collection opn account recievables Apr-30 54750 may sales 218450 total cash reciepts 273200 Minden company schedule for expected cash disbursement may purchases 48400 april 30 account payable 18100 total 66500 minden company cash budget for may beginning inventory 53750 add cash collection from customers 273200 total cash available 326950 less cash disbursement purchase of inventory -48400 selling and administrative expenses -83700 purchase of equipment -13100 excess cash available over dusbursement 181750 finnancing borrowing-note 22000 repayment -18100 interest -340 ending cash balance 185310 minden company budgeted income statement sales 257000 cost of goods sold -143750 gross profit 113250 selling and adminstrative expense -83700 depreciation -2800 income from operation 26750 less interest expense -340 net income 26410 MINDEN COMPOANY BUDGETED BALANCESHEET May-31 ASSETS CASH 175710 ACCOUNTS RECIEVABLES 54750 INVENTORY 31000 BUILDINGS EQUIPMENT 48400 TOTAL ASSETS 309860 LIABILITIES AND STOCKHOLDER EQUITY ACCOUNTS PAYABLE 0 NOTE PAYABLE 40100 COMMON STOCK 180000 RETAINED EARNING 63500 NET INCOME 26410 89910 TOTAL LIABILITIES 309860

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