Assets Cash 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 $ 11,500 64,750 47,000 220,000 $ 343,250 $ 70,750 19,900 180,000 72,600 $ 343,250 The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $290,000 for May. Of these sales, $87,000 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. b. Purchases of inventory are expected to total $210,000 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 $79,500. d. Selling and administrative expenses for May are budgeted at $96,300, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $5,800 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $450 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $7,600 will be purchased for cash during May. g. During May, the company will borrow $23,700 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.
Assets Cash 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 $ 11,500 64,750 47,000 220,000 $ 343,250 $ 70,750 19,900 180,000 72,600 $ 343,250 The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $290,000 for May. Of these sales, $87,000 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. b. Purchases of inventory are expected to total $210,000 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 $79,500. d. Selling and administrative expenses for May are budgeted at $96,300, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $5,800 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $450 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $7,600 will be purchased for cash during May. g. During May, the company will borrow $23,700 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Assets
April 30
Cash
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
$ 11,500
64,750
47,000
220,000
$ 343,250
$ 70,750
19,900
180,000
72,600
$ 343,250
The company is in the process of preparing a budget for May and has assembled the following data:
a. Sales are budgeted at $290,000 for May. Of these sales, $87,000 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.
b. Purchases of inventory are expected to total $210,000 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 $79,500.
d. Selling and administrative expenses for May are budgeted at $96,300, exclusive of depreciation. These expenses will be paid in
cash. Depreciation is budgeted at $5,800 for the month.
e. The note payable on the April 30 balance sheet will be paid during May, with $450 in interest. (All of the interest relates to May.)
f. New refrigerating equipment costing $7,600 will be purchased for cash during May.
g. During May, the company will borrow $23,700 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.
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