a. Sales are budgeted at $255,000 for May. Of these sales, $76,500 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 are 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 $189,000 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 $77,500. d. Selling and administrative expenses for May are budgeted at $93,600, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $6,250 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $370 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $8,600 will be purchased for cash during May. g. During May, the company will borrow $29,500 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: For May: 1. Calculate the expected cash collections from customers. 2. Calculate the expected cash disbursements for merchandise purchases. 3. Prepare a cash budget. 4. Prepare a budg ed income statement. 5. Prepare an end-of-month budgeted balance sheet. Complete this question by entering your answers in the tabs below. Required 1 and 2 Required 3 Required 4 Required 5 1. Calculate the expected cash collections from customers for May. 2. Calculate the evnected cach dichureamente for merchandico nurchacos for May
a. Sales are budgeted at $255,000 for May. Of these sales, $76,500 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 are 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 $189,000 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 $77,500. d. Selling and administrative expenses for May are budgeted at $93,600, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $6,250 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $370 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $8,600 will be purchased for cash during May. g. During May, the company will borrow $29,500 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: For May: 1. Calculate the expected cash collections from customers. 2. Calculate the expected cash disbursements for merchandise purchases. 3. Prepare a cash budget. 4. Prepare a budg ed income statement. 5. Prepare an end-of-month budgeted balance sheet. Complete this question by entering your answers in the tabs below. Required 1 and 2 Required 3 Required 4 Required 5 1. Calculate the expected cash collections from customers for May. 2. Calculate the evnected cach dichureamente for merchandico nurchacos for May
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
![Problem 8-19 (Algo) Cash Budget; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-8, LO8-9, LO8-
10]
Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given
below:
Assets
Cash
Minden Company
Balance Sheet
April 30
Accounts receivable
Inventory
Buildings and equipment, net of depreciation
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Note payable
Common stock
Retained earnings
Total liabilities and stockholders' equity
C
$ 11,100
72,500
37,500
238,000
$ 359,100
$ 68,000
19,400
180,000
91,700
$ 359,100
The company is in the process of preparing a budget for May and assembled the following data:
a. Sales are budgeted at $255,000 for May. Of these sales, $76,500 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 are 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 $189,000 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 hudgeted at $77500](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe6069db0-f496-4c11-99c9-1e809a876661%2F715474c5-92cf-44d1-a136-acf458b81306%2Flolv5fs_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 8-19 (Algo) Cash Budget; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-8, LO8-9, LO8-
10]
Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given
below:
Assets
Cash
Minden Company
Balance Sheet
April 30
Accounts receivable
Inventory
Buildings and equipment, net of depreciation
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Note payable
Common stock
Retained earnings
Total liabilities and stockholders' equity
C
$ 11,100
72,500
37,500
238,000
$ 359,100
$ 68,000
19,400
180,000
91,700
$ 359,100
The company is in the process of preparing a budget for May and assembled the following data:
a. Sales are budgeted at $255,000 for May. Of these sales, $76,500 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 are 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 $189,000 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 hudgeted at $77500
Transcribed Image Text:a. Sales are budgeted at $255,000 for May. Of these sales, $76,500 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 are 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 $189,000 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 $77,500.
d. Selling and administrative expenses for May are budgeted at $93,600, exclusive of depreciation. These expenses will be paid in
cash. Depreciation is budgeted at $6,250 for the month.
e. The note payable on the April 30 balance sheet will be paid during May, with $370 in interest. (All of the interest relates to May.)
f. New refrigerating equipment costing $8,600 will be purchased for cash during May.
g. During May, the company will borrow $29,500 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:
For May:
1. Calculate the expected cash collections from customers.
2. Calculate the expected cash disbursements for merchandise purchases.
3. Prepare a cash budget.
4. Prepare a budgeted income statement.
5. Prepare an end-of-month budgeted balance sheet.
Complete this question by entering your answers in the tabs below.
Required 1
and 2
Required 3 Required 4
Required 5
1. Calculate the expected cash collections from customers for May.
2 Calculate the ovnected cach dichurcomante for merchandica nurchaces for May
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education