Ashley * 201 810-Sp s? D Chapter 8: x :) Files × perfect con × New Tab × Economi

Question

Ashley * 201 810-Sp s? D Chapter 8: x :) Files × perfect con × New Tab × Economics × "New Tab × Hawkes Le × ! ! Hawkes Lee × ezto.mheducation.com/hm.tpx 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 depreclation $ 9,200 76,250 49,750 228,000 Total assets $363,200 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings 63,750 23,900 180,000 95,550 Totall liabilities and stockholders' equity $363,200 The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $227,000 for May. Of these sales, $68,100 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 ay b. Purchases of inventory are expected to total $159,000 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 $87,500 d. Selling and administrative expenses for May are budgeted at $79,500, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $6,000 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $105 in interest. (All of the interest relates to May.) . New refrigerating equipment costing $11,800 will be purchased for cash during May. g. During May, the company will borrow $25,100 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.

Explanation / Answer

a) Cash Collection Schedule From Accounts Receiavble 76250 Cash Sales 68100 Credit sales of May 79450 =(227000-68100)/2 Total Cash Collection 223800 Cash Disbusrement Schedule-Merchandise Purchase From accounts payable 63750 For May purchase 63600 =159000*40% Total cash disbursement -Merchandise 127350 1 b Cash Budget Opening Cash 9200 Add: Cash collection 223800 Add: Bank borrowing 25100 Cash Available 258100 Less: Cash disbursement : Merchandise 127350 Selling and admin exp 79500 Note Payable & Interest 24005 =23900+105 New Equipment 11800 Total cash disbursement 242655 Closing Cash 15445 (258100-242655) 2 Budgeted Income Statement Sales 227000 Cost of goods sold: Opening Inventory 49750 Purchases 159000 Cost of goods available 208750 (49750+159000) Closing Inventory 87500 Cost of goods sold 121250 (208750-87500) Gross Profit 105750 (227000-105750) Selling and admin expenses 85605 (79500+6000+105) Net Profit 20145 3 Budgeted balance Sheet Assets Cash 15445 Accounts Receivable 79450 =(227000-68100)/2 Inventory 87500 Buildings & equipment net of depreciation 233800 =228000-6000+11800 Total Assets 416195 Liabilities & Stock Equity Accounts Payable 95400 =159000*60% Note Payable 25100 Common Stock 180000 Retained Earning 115695 =95550+20145 Total Liabilities & Stock Equity 416195

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