Pad 6:48 PM ezto.mheducation.com 96% Minden Company is a wholesale distributor o
ID: 2512274 • Letter: P
Question
Pad 6:48 PM ezto.mheducation.com 96% 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 as Accounts receivable Inventory Buildings and equipment, net of depreciation $ 12,000 77,500 42,000 225,000 Total assets $356,500 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings $ 78,250 19,300 180,000 78,950 Total liabilities and stockholders' equity $356,500 The company is in the process of preparing a budget for May and has assembled the following data a. Sales are budgeted at $231,000 for May. Of these sales, $69,300 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 b. Purchases of inventory are expected to total $139,000 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 $55,000 d. Selling and administrative expenses for May are budgeted at $83,400, exclusive of depreciation. These e. The note payable on the April 30 balance sheet will be paid during May, with $155 in interest. (All of the f. New refrigerating equipment costing $12,500 will be purchased for cash during May expenses will be paid in cash. Depreciation is budgeted at S6,200 for the month interest relates to May.) g. During May, the company will borrow $24,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one yearExplanation / Answer
1. Minden Company
Cash Budget
For the month ended May 31
Minden Company
Income Statement
For the month ended May 31
Minden Company
Balance Sheet
May 31
2.
ROI = Net Operating Income / Average Operating Assets.
Residual Income = Net Operating Income - [ Average Operating Assets x Minimum Required Rate of Return % ]
$ $ Beginning Cash Balance 12,000 Cash Sales 69,300 Collection of Credit Sales 158,350 Borrowing from Bank 24,000 Total Cash Available 263,650 Less: Disbursements for Merchandise Purchases ( 139,000 x 40% + 78,250) 133,850 Selling and Administrative Expenses 83,400 Retirement of Note Payable 19,300 Interest Expense 155 Purchase of Refrigeration Equipment 12,500 Total Cash Disbursements 249,205 Ending Cash Balance $ 14,445Related Questions
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