Question

The following information is available in the question attached:

Answer 1

For total cash receipts and disbursements, we prepare the below statements

Minden Company
Expected Cash Collections from Sales
Particulars	Calculation	Amount
Cash Sales of May		$72,000
Collection of Accounts Receivables of April		$75,500
Cash from May's Credit Sale	($240000-$72000)*50%	$84,000
Total Cash Receipts		$231,500
Minden Company
Schedule of Cash Disbursements
Particulars	Calculation	Amount
Payment outstanding on April 30		$86,750
Payment of May's Credit Purchases	($118,000 x 40%)	$47,200
Total Cash Disbursements		$133,950

All information included in the Cash Budget are already provided in the question attached and hence requires no extra calculations.

 

 

For preparing the Income Statement, the required Cost of Goods Sold is calculated.

Particulars	Amount
Opening Balance of Inventory	$37,000
Add: Budgeted Purchases during May	$118,000
Less: Budgeted Closing Inventory	$31,500
Cost of Goods Sold	$123,500

Out of the total sales of $240,000, $72,000 worth is for cash.

Out of the remaining available accounts receivables, 50% has already been received this current month and the remaining 50% is yet to be collected.

 

Accounts Receivable = (Total Sales - Cash Sales ) x Percentage Remaining

= ($240,000 - $72,000) x 50% = $84,000

Accounts Receivable=(Total Sales − Cash Sales) x Percentage Remaining=($240,000−$72,000)×50%=$84,000.00

The building amount will reflect the new purchases and the depreciation charged.

 

Building & Equipment = Book Value + Purchases - Depreciation Charged

= $258,000 + $15,000 - $2,400

= $270,600

 

Retained Earnings = Book Value + This Month's Profits = $104,750 + $20,440 = $125,190

 

Accounts Payable = Credit Purchases x (1 - Percentage paid) = $118,000 x (1-0.4) = $70,800

 

Minden Company
Cash Budget
For the month of May
Beginning Cash Balance	$16,700
Add: Collections from Customers	$231,500
Total Cash Available (A)	$248,200
Less: Cash Disbursements
For Merchandise	$133,950
For Selling & Administrative Expenses	$93,500
For Equipment	$15,000
Total Cash Disbursements (B)	$242,450
Excess (deficiency) of cash (C = A - B)	$5,750
Financing:
Borrowing	$26,600
Repayments	-$15,700
Interest	-$160
Ending Cash Balance	$16,490

 

 

 

Minden Company
Budgeted Income Statement
For the month of May
Budgeted Sales	$240,000
Less: Cost of Goods Sold	$123,500
Gross Profit	$116,500
Less:
Selling and Administrative Expenses	$93,500
Depreciation Expense	$2,400
Interest Expense	$160
Net Income	$20,440

 

 

Minden Company
Balance Sheet
For the month of May
Assets
Current Assets:
Cash	$16,490
Accounts Receivable	$84,000
Inventory	$31,500
Total Current Assets	$131,990
Building and Equipment, net	$270,600
Total Assets	$402,590
Liabilities & Stockholder's Equity
Stockholder's Equity
Capital Stock	$180,000
Retained Earnings	$125,190
Total Stockholder's Equity	$305,190
Liabilities
Accounts Payable	$70,800
Notes Payable	$26,600
Total Liabilities & Stockholder's Equity	$402,590

 

 

Building and Equipment=Book Value + Purchases − Depreciation Charged=$258,000+$15,000−$2,400=$270,600

 

Retained Earnings=Book Value + This Month′s profits=$104,750+20,440=$125,190

 

 

Total Cash Collections - $231,500

Total Cash Disbursements - $133,950

 

Ending Cash Balance - $16,490

 

Net Income - $20,440

 

Balance Sheet: Assets = Liabilities & Shareholder's Equity = $402,590