minden company is a wholesale distributor of premium European chocolates
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 Accounts receivable Inventory Buildings and equipment, net of depreciation $ 9,600 54,750 53,750 214,000 Total assets $ 332,100 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings $ 70,500 18,100 180,000 63,500 Total liabilities and stockholders' equity $ 332, 100 The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $257,000 for May. Of these sales, $77,100 will be for cash; the remainder will be credit sales. One-half of a month's credit sales are collected in the month the sales are made, and the onth. All of the April 30 accounts receivable will be collected in May b. Purchases of inventory are expected to total $121,000 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 $31,000. d. Selling and administrative expenses for May are budgeted at $83,700, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,800 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $340 in interest. (All of the interest relates to May.) 1. New refrigerating equipment costing $13.100 will be purchased for cash during May g. During May, the company will borrow $22.000 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-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 sales-May | $ 77,100 Collections on account receivable: April 30 balance 54,750 May sales 89,950 Total cash receipts $ 221,800 Minden Company Schedule of Expected Cash Disbursements April 30 accounts payable balance $ 70,500 May purchases 48,400 Total cash payments $ 118,900 1-b. Prepare a cash budget for May. (Cash deficiency, repayments and interest should be indicat by a minus sign.) $ 9,600 231,400 Minden Company Cash Budget For the Month of May Beginning cash balance Add collections from customers Total cash available Less cash disbursements: Purchase of inventory Selling and administrative expenses Purchases of equipment Total cash disbursements Excess of cash available over disbursements Financing: Borrowing-note Repayments-note Interest Total financing Ending cash balance 118,900 83,700 13,100 215,700 15,700 22,000 (18,100) (340) 3,560 19,260 $ 2. Prepare a budgeted income statement for May using the absorption costing income statement form $ 257,000 Minden Company Budgeted Income Statement For the Month of May Sales Cost of goods sold: Beginning inventory 53,750 Purchases 121,000 174,750 Ending inventory 31,000 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income 143,750 113,250 86,500 26,750 (340) 26,410 $ 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 0 Total assets $ Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings Total liabilities and stockholders' equity
