Saved Help Save & Exit Su Check my wo Minden Company is a wholesale distributor

Question

Saved Help Save & Exit Su Check my wo 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 Accounta receivable s 10,000 62,750 32,750 Inventory Buildinge and equipment, net of depreciation219,000 Total assets 324,500 Liabilities and Stockholders Equity Accounts payable Note payable Common stock Retained earninge 69,000 22,700 180,000 52,800 324,500 Total liabilities and “tockholders , equity The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $254,000 for May Of these sales, $76,200 will be for cash; the remainder will be credit sales. One-half of a b. Purchases of inventory are expected to total $137,000 during May. These purchases will all be on account. F c. The May 31 inventory balance is budgeted at $45,000. e. The note payable on the April 30 balance sheet will be paid during May, with $350 in interest. (All of th 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. purchases are paid for in the month to suppliers will be paid during May of purchase; the remainder are paid in the following month. All of the April 30 accounts payable orty percent of all administrative expenses for May are budgeted at $98,400, exclusive of depreciation. These expenses will be cash. Depreciation is budgeted at $5,550 for the month.

Explanation / Answer

Schedule of expected cash collections Cash Sales - May Collections On accounts Receivables 76200 April 30 balance 62750 May sales 88900 Total Cash Receipts 227850 Schedule of expected cash disbursments April 30 accounts payable balance 69000 May Purchase 54800 Total Cash Payaments 123800 Minden Company Cash Budget For the month of May Beginning cash Balance 10000 Add: Collections from customers 227850 Total Cash Available 237850 Less Cash Disbursments Purchse of inventory 123800 Selling and administrative expense 98400 Purchase of equipment 8700 Total Cash Disbursments 230900 Excess of cash available over disbursments 6950 Financing Borrowing Note 27400 Repaying Note -22700 Interest 350 Total Financing 5050 Ending Cash Balance 12000 Minden Company Budgeted Income Statement For the month of May Sales 254000 Cost of goods sold Beginning Inventory 32750 Purchases 137000 Goods available for sale 169750 Ending Inventory 45000 Cost of goods sold 124750 Gross Margin 129250 Selling and administrative Expense (98400+5550) 103950 Net Operating Income 25300 Interest Expense 350 Net Income 25650 Minden Company Balance Sheet For the month of May Assets Cash 12000 Accounts Receivable 88900 Inventory 45000 Buildings and equipment , net of dep (219000+8700-5550) 222150 Total Assets 368050 Liabilities and Stockholder's Equity Accounts Payable (137000*.6) 82200 Note Payable 27400 Common stock 180000 Retained Earnnings (52800+25650) 78450 Total Liabilities 368050 1-a. Schedule of cash receipts: Collections on account receivable for May sales = (254000-76200) = 50% × $177,800 = $88,900

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