Question

In: Accounting

Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of...

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 $ 18,700 Accounts receivable 70,250 Inventory 41,250 Buildings and equipment, net of depreciation 230,000 Total assets $ 360,200 Liabilities and Stockholders’ Equity Accounts payable $ 72,250 Note payable 13,700 Common stock 180,000 Retained earnings 94,250 Total liabilities and stockholders’ equity $ 360,200 The company is in the process of preparing a budget for May and has assembled the following data: Sales are budgeted at $214,000 for May. Of these sales, $64,200 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 remainder is collected in the following month. All of the April 30 accounts receivable will be collected in May. Purchases of inventory are expected to total $122,000 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. The May 31 inventory balance is budgeted at $47,500. Selling and administrative expenses for May are budgeted at $85,500, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,050 for the month. The note payable on the April 30 balance sheet will be paid during May, with $390 in interest. (All of the interest relates to May.) New refrigerating equipment costing $16,300 will be purchased for cash during May. During May, the company will borrow $24,500 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.

Solutions

Expert Solution

SOLUTION

(A) Schedule of cash collections-

Particulars Amount ($)
Cash sales - May 64,200
Collections on accounts receivables:
April 30 balance 70,250
May sales (214,000-64,200)*50% 74,900
Total cash receipts 209,350

(B) Schedule of cash disbursement-

Particulars Amount ($)
April 30 accounts payable balance 72,250
May purchases (122,000*40%) 48,800
Total cash payments 121,050

(C) Cash budget

Particulars Amount ($)
Beginning cash balance 18,700
Add: Collection form customers 209,350
Total cash available (A) 228,050
Less: Cash disbursements
Purchase of inventory (121,050)
Selling and administrative expense (85,500)
Purchase of equipment (16,300)
Total cash disbursements (B) 222,850
Excess of cash available over disbursement (A-B) 5,200
Financing:
Borrowing -note 24,500
Repayment - note (13,700)
Interest (390)
Total financing 10,410
Ending cash balance 15,610

(D) Budgeted income statement-

Particulars Amount ($) Amount ($)
Sales 214,000
Cost of goods sold
Beginning inventory 41,250
Purchases 122,000
Goods available for sale 163,250
Ending inventrory (47,500)
Cost of goods sold 115,750
Gross margin 98,250
Sellig and administrative expenses (85,500+2,050) (87,550)
Net operating income 10,700
Interest income (390)
Net income 10,310

(5) Budgeted balance sheet-

Amount ($)
Assets-
Cash 15,610
Accounts receivable (214,000-64,200)*50% 74,900
Inventory 47,500
Building, Equipment, net of depreciation (230,000+16,300-2,050) 244,250
Total assets 382,260
Liabilities and stockholder's equity-
Accounts payable (122,000*60%) 73,200
Notes payable 24,500
Common stock 180,000
Retained earnings (94,250+10,310) 104,560
Total liabilities and stockholder's equity 382,260

Related Solutions

Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of...
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 $ 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...
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of...
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 $ 14,600   Accounts receivable 55,000   Inventory 43,500   Buildings and equipment, net of depreciation 223,000   Total assets $ 336,100 Liabilities and Stockholders’ Equity   Accounts payable $ 74,500   Note payable 15,000   Common stock 180,000   Retained earnings 66,600   Total liabilities and stockholders’ equity $ 336,100    The company is in the process of...
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of...
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 $ 16,500 Accounts receivable 67,000 Inventory 32,000 Buildings and equipment, net of depreciation 249,000 Total assets $ 364,500 Liabilities and Stockholders’ Equity Accounts payable $ 68,750 Note payable 20,500 Common stock 180,000 Retained earnings 95,250 Total liabilities and stockholders’ equity $ 364,500 The company is in the process of preparing a...
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of...
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 $ 16,500 Accounts receivable 67,000 Inventory 32,000 Buildings and equipment, net of depreciation 249,000 Total assets $ 364,500 Liabilities and Stockholders’ Equity Accounts payable $ 68,750 Note payable 20,500 Common stock 180,000 Retained earnings 95,250 Total liabilities and stockholders’ equity $ 364,500 The company is in the process of preparing a...
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of...
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 $ 16,500 Accounts receivable 67,000 Inventory 32,000 Buildings and equipment, net of depreciation 249,000 Total assets $ 364,500 Liabilities and Stockholders’ Equity Accounts payable $ 68,750 Note payable 20,500 Common stock 180,000 Retained earnings 95,250 Total liabilities and stockholders’ equity $ 364,500 The company is in the process of preparing a...
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of...
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 $ 11,400 Accounts receivable 75,000 Inventory 41,000 Buildings and equipment, net of depreciation 224,000 Total assets $ 351,400 Liabilities and Stockholders’ Equity Accounts payable $ 70,000 Note payable 15,500 Common stock 180,000 Retained earnings 85,900 Total liabilities and stockholders’ equity $ 351,400 The company is in the process of preparing a...
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of...
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 $ 9,200 Accounts receivable 76,250 Inventory 49,750 Buildings and equipment, net of depreciation 228,000 Total assets $ 363,200 Liabilities and Stockholders’ Equity Accounts payable $ 63,750 Note payable 23,900 Common stock 180,000 Retained earnings 95,550 Total liabilities and stockholders’ equity $ 363,200 The company is in the process of preparing a...
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of...
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 $ 16,500 Accounts receivable 67,000 Inventory 32,000 Buildings and equipment, net of depreciation 249,000 Total assets $ 364,500 Liabilities and Stockholders’ Equity Accounts payable $ 68,750 Note payable 20,500 Common stock 180,000 Retained earnings 95,250 Total liabilities and stockholders’ equity $ 364,500 The company is in the process of preparing a...
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of...
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 $ 15,800 Accounts receivable 70,200 Inventory 38,750 Buildings and equipment, net of depreciation 222,000 Total assets $ 346,750 Liabilities and Stockholders’ Equity Accounts payable $ 74,750 Note payable 14,700 Common stock 180,000 Retained earnings 77,300 Total liabilities and stockholders’ equity $ 346,750 The company is in the process of preparing a...
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of...
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 $ 11,100 Accounts receivable 72,500 Inventory 37,500 Buildings and equipment, net of depreciation 238,000 Total assets $ 359,100 Liabilities and Stockholders’ Equity Accounts payable $ 68,000 Note payable 19,400 Common stock 180,000 Retained earnings 91,700 Total liabilities and stockholders’ equity $ 359,100 The company is in the process of preparing a...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT