on.com/hm.tpx 10.00 points distributor of premium European chocolates. The compa

Question

on.com/hm.tpx 10.00 points distributor of premium European chocolates. The company's balance Minden Company is a wholesale sheet as of April 30 is given below Minden Company Balance Sheet April 30 Assets Accounts receivable Buildings and equipment, net of depreciation Total assets s 10,000 62,750 32,750 219,000 324,500 Liabilities and Stockholders Equity Accounts payable Nobe payable Common stock Retained earnings $69,000 22,700 180,000 52,800 Total liabilities and stockholders equity $324,500 The company is in the process of preparing a budget for May and has assembled the following data a. Sales are budgebed at $254,000 for May. Of these sales, $76,200 will be for cash; the remainder wil 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 $137,000 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 he folowing month All of the April 30 accounts payable to suppliers wil be paid during May c. The May 31 inventory balance is budgebed at $45,000 d. Seling and administrative expenses for May are budgeted at $98,400, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $5,550 for the month. e The note payable on the April 30 balance sheet will be paid during May, with $350 in interest. (All of the nterest relates to May.) t. New refrigerating equipment costing $8,700 will be purchased for cash during May g. During May, the company will borow $27,400 from its bank by giving a new note puaryable to the bank for that amount. The new note will be due in one year 3 4 5 6

Explanation / Answer

MINDEN COMPANY Schedule of Expected Cash Collections Cash Sales - May 76200 Collections from Credit sales :     April - Sales 62750     May Sales 50% of (254,000 - 76,200) 88900 Total Colllections 227850 MINDEN COMPANY Schedule of Expected Cash Disbursements for Purchases April 30, Accounts Payable Balance 69000 May Purchases   - (40% of 137,000) 54800 Total csdh payments for purchases 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 Disbursements     Purchase of inventory 123800     Selling and administrative expenses 98400     Purchase of Equipment 8700 Total Cash Disbursements 230900 Excess of cash available over disbursements 6950 Financing:     Borrowing - Note 27400     Repayment - Note -22700     Interest -350 Total Financing 4350 Ending Cash Balance 11300 MINDEN COMPANY Income Statement 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 profit 129250 Selling and administrative expenses 98400 Depreciation 5550 Total operating expenses 103950 Operating Income 25300 Interest Expense 350 Net Income 24950 MINDEN COMPANY Balance Sheet Assets Cash 11300 Accounts Receivable 88900 Inventory 45000 Building and equipment , net   - Beginning 219000 Add: puchases 8700 Less: Depreciation 5550 222150 Total Assets 367350 Liabilities and Equity Accounts Payable 82200 Note Payable 27400 Total Liabilities 109600 Common Stock 180000 Retained Earnings 77750 Total Stockholders' equity 257750 Total Liabilities and Stockholders' equity 367350

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