Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 $ 10,300
Accounts receivable 70,000
Inventory 43,000
Buildings and equipment, net of depreciation 227,000
Total assets $ 350,300
Liabilities and Stockholders Equity
Accounts payable $ 86,000
Note payable 23,000
Common stock 180,000
Retained earnings 61,300
Total liabilities and stockholders equity $ 350,300

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

  1. Sales are budgeted at $276,000 for May. Of these sales, $82,800 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.

  2. Purchases of inventory are expected to total $147,000 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.

  3. The May 31 inventory balance is budgeted at $43,000.

  4. Selling and administrative expenses for May are budgeted at $97,500, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $3,200 for the month.

  5. The note payable on the April 30 balance sheet will be paid during May, with $235 in interest. (All of the interest relates to May.)

  6. New refrigerating equipment costing $12,100 will be purchased for cash during May.

  7. During May, the company will borrow $29,200 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 from customers 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

5. Prepare a budgeted balance sheet as of May 31.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Brazilian Economy Confronting Structural Challenges

Authors: Edmund Amann

1st Edition

0367245272, 9780367245276

More Books

Students also viewed these Accounting questions