Minden Company is a wholesale distributor of premium European chocolates The companys balance sheet as of April 30 is given below Minden Company Balance Sheet April 30 Assets Cash $ 9,000 Accounts receivable 54,000 Inventory 30,000 Buildings and equipment, net of depreciation 207,000 Total assets $ 300,000 Liabilities and Stockholders Equity Accounts payable $ 63,000 Note payable 14,500 Common stock 180,000 Retained earnings 42,500 Total liabilities and stockholders equity $ 300,000 The company is in the process of preparing a budget for May and has assembled the following data Sales are budgeted at $220,000 for May Of these sales, $60,000 will be for cash the remainder will be credit sales Each months credit sales are collected 60 in the month of sale and 40 in the month following the sale All of the April 30 accounts receivable will be collected in May Purchases of inventory are expected to total $120,000 during May These purchases will all be on account The company pays for 50 of its merchandise purchases in the month of the purchase and the remaining 50 in the month following the purchase All of the April 30 accounts payable to suppliers will be paid during May The May 31 inventory balance is budgeted at $40,000 Selling and administrative expenses for May are budgeted at $72,000, exclusive of depreciation These expenses will be paid in cash Depreciation is budgeted at $2,000 for the month The note payable on the April 30 balance sheet will be paid during May, with $100 in interest (All of the interest relates to May ) New refrigerating equipment costing $6,500 will be purchased for cash during May During May, the company will borrow $20,000 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 Calculate the expected cash collections for May 2 Calculate the expected cash disbursements for merchandise purchases for May 3 Prepare a cash budget for May 4 Prepare a budgeted income statement for May 5 Prepare a budgeted balance sheet as of May 31

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Posted on Sep 14, 2024

Minden Company is a wholesale distributor of premium European chocolates. The companys balance sheet as of April 30 is given below:

Minden Company Balance Sheet April 30
Assets
Cash	$	9,000
Accounts receivable		54,000
Inventory		30,000
Buildings and equipment, net of depreciation		207,000
Total assets	$	300,000
Liabilities and Stockholders Equity
Accounts payable	$	63,000
Note payable		14,500
Common stock		180,000
Retained earnings		42,500
Total liabilities and stockholders equity	$	300,000

The company is in the process of preparing a budget for May and has assembled the following data:

Sales are budgeted at $220,000 for May. Of these sales, $60,000 will be for cash; the remainder will be credit sales. Each months credit sales are collected 60% in the month of sale and 40% in the month following the sale. All of the April 30 accounts receivable will be collected in May.
Purchases of inventory are expected to total $120,000 during May. These purchases will all be on account. The company pays for 50% of its merchandise purchases in the month of the purchase and the remaining 50% in the month following the purchase. All of the April 30 accounts payable to suppliers will be paid during May.
The May 31 inventory balance is budgeted at $40,000.
Selling and administrative expenses for May are budgeted at $72,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month.
The note payable on the April 30 balance sheet will be paid during May, with $100 in interest. (All of the interest relates to May.)
New refrigerating equipment costing $6,500 will be purchased for cash during May.
During May, the company will borrow $20,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.