Assets $ 12,000 77,500 42,000 225,000 $ 356,500 Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Note payable $ 78,250 19,300 180,000 78,950 $ 356,500 Common stock Retained earnings Total liabilities and stockholders' equity he company is in the process of preparing a budget for May and has assembled the following data: 1. Sales are budgeted at $231,000 for May. Of these sales, $69,300 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 $139,000 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
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
![Assets
Cash
$
12,000
77,500
42,000
Accounts receivable
Inventory
Buildings and equipment, net of depreciation
225,000
$ 356,500
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Note payable
$
78,250
19,300
180,000
Common stock
Retained earnings
78,950
$ 356,500
Total liabilities and stockholders' equity
The company is in the process of preparing a budget for May and has assembled the following data:
a. Sales are budgeted at $231,000 for May. Of these sales, $69,300 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 $139,000 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 $55,000.
d. Selling and administrative expenses for May are budgeted at $83,400, exclusive of depreciation. These expenses will be paid in
cash. Depreciation is budgeted at $6,200 for the month.
e. The note payable on the April 30 balance sheet will be paid during May, with $155 in interest. (All of the interest relates to May.)
f. New refrigerating equipment costing $12,500 will be purchased for cash during May.
g. During May, the company will borrow $24,000 from its bank by giving a new note payable to the bank for that amount. The new
note will be due in one year.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Feb79e236-fd35-4e7c-aec1-1f12bebb87a9%2F10732e27-5528-487a-a0ba-432c650be89d%2F1gpuji_processed.png&w=3840&q=75)
![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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Feb79e236-fd35-4e7c-aec1-1f12bebb87a9%2F10732e27-5528-487a-a0ba-432c650be89d%2Fpgy09x6_processed.png&w=3840&q=75)
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