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

$

17,200

Accounts receivable

58,000

Inventory

48,250

Buildings and equipment, net of depreciation

204,000

Total assets

$

327,450

Liabilities and Stockholders Equity

Accounts payable

$

67,000

Note payable

16,200

Common stock

180,000

Retained earnings

64,250

Total liabilities and stockholders equity

$

327,450

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

	a. Sales are budgeted at $253,000 for May. Of these sales, $75,900 will be for cash; the remainder will be credit sales. One-half of a months 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 $140,000 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 $47,000.
	d. Selling and administrative expenses for May are budgeted at $93,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,850 for the month.
	e. The note payable on the April 30 balance sheet will be paid during May, with $300 in interest. (All of the interest relates to May.)
	f. New refrigerating equipment costing $11,100 will be purchased for cash during May.
	g. During May, the company will borrow $25,400 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..

Minden Company
Schedule of Expected Cash Collections
Cash salesMay
Collections on account receivable:
April 30 balance
May sales
Total cash receipts

Minden Company
Schedule of Expected Cash Disbursements
April 30 accounts payable balance
May purchases
Total cash payments

1-b.

Prepare a cash budget for May. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

Minden Company
Cash Budget
For the Month of May
Beginning cash balance
Add collections from customers
Total cash available	0
Less cash disbursements:
Purchase of inventory
Selling and administrative expenses
Purchases of equipment
Total cash disbursements	0
Excess of cash available over disbursements	0
Financing:
Borrowingnote
Repaymentsnote
Interest
Total financing	0
Ending cash balance

2.

Prepare a budgeted income statement for May using the absorption costing income statement format

Minden Company
Budgeted Income Statement
For the Month of May
Sales
Cost of goods sold:
Beginning inventory
Purchases
Goods available for sale	0
Ending inventory
Cost of goods sold		0
Gross margin		0
Selling and administrative expenses
Net operating income		0
Interest expense
Net income

3.

Prepare a budgeted balance sheet as of May 31.

Minden Company
Budgeted Balance Sheet
May 31
Assets
Cash
Accounts receivable
Inventory
Buildings and equipment, net of depreciation
Total assets	$0
Liabilities and Stockholders Equity
Accounts payable
Note payable
Common stock
Retained earnings
Total liabilities and stockholders equity

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