2. 10.,00 ponts Minden Company is a wholesale distributor of premium European ch

Question

2. 10.,00 ponts 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 Buildings and equipment, net of depreclation Total assets $ 9,400 78,500 44,000 221,000 352,900 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings S 72,000 19,700 180,000 81,200 Total liabilities and stockholders equity $ 352,900 The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $256,000 for May. Of these sales, $76,800 will be for cash; the remainder will be credit sales. One-haif 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 $188,000 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 $83,000. d. Selling and administrative expenses for May are budgeted at $91,500, exclusive of depreciation. These e. The note payable on the April 30 balance sheet will be paid during May, with $435 in interest. (All of the f. Now refrigerating equipment costing $7,000 will be purchased for cash during May expenses will be paid in cash. Depreciation is budgeted at $4,000 for the month interest relates to May.) g During May, the company will borrow $23,100 from its bank by giving a new note payable to the bank for that amount. The new note wil be due in one year. 1-a. Propare a schedule of expected cash collections from sales and a O Type here to search Dll F3 FS F6 4

Explanation / Answer

1-a) Schedule of Expected cash collection Cash sales-May 76,800 Collections on account receivable April 30 balance 78,500 May sales (256000-76800)*50% 89600 total cash recepits 244,900 Schedule of Expected cash disbursements April 30 accounts payable balance 72,000 May purchases (188,000*40%) 75200 total cash payments 147,200 1-b)                          Cash Budget                                                      Beginning cash balance 9,400 Add Collections from customers 244,900 total cash available 254,300 less Cash disbursements purchase of inventoru 147,200 selling and administrative expense 91,500 purchase of Equipment 7,000 total cash disbursements 245,700 Excess of cash available over disbursements 8,600 financing: borrowing -note 23,100 Repayments-note -19,700 interest -435 total financing 2,965 Ending cash balance 11,565 Budgeted income statement sales 256,000 cost of goods sold: beginning inventory 44,000 purchases 188,000 goods available for sale 232,000 ending invnetory 83,000 cost of goods sold: 149,000 Gross margin 107,000 Selling and administrative expesne 95500 net operating income 11,500 interest expesne 435 net income 11,065 Budgeted balance sheet Assets Cash 11,565 Account receivable 89600 inventory 83,000 buildings & equipment,net of depreciaiton 224000 total Assets 408,165 Laibilities & stockholder's Equity Accounts payable 112800 note payable 23,100 common stock 180,000 Retained earnings 92,265 total liabilities & stockholders equity 408165

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