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 $ 11,100 72,500 37,500 238,000 $ 359,100 $ 68,000 19,400 180,000 91,700 $ 359,100 Note payable Common stock Retained earnings 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 $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 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 $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: 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.
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 $ 11,100 72,500 37,500 238,000 $ 359,100 $ 68,000 19,400 180,000 91,700 $ 359,100 Note payable Common stock Retained earnings 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 $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 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 $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: 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given
below:
Assets
Cash
Accounts receivable
Inventory
Buildings and equipment, net of depreciation
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Minden Company
Balance Sheet
April 30
Note payable
Common stock
Retained earnings
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 $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 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 $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.
Req 1 and 2
$ 11,100
72,500
37,500
238,000
$ 359,100
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.
Req 3
$ 68,000
19,400
180,000
91,700
$ 359,100
Complete this question by entering your answers in the tabs below.
Total cash collections
Total cash disbursements
Req 4
Req 5
1. Calculate the expected cash collections from customers for May.
2. Calculate the expected cash disbursements for merchandise purchases for May.
Transcribed Image Text:Prepare a cash budget for May. (Cash deficiency, repayments and interest should be indicated by a minus sign.)
Minden Company
Cash Budget
For the Month of May
Beginning cash balance
Add collections from customers
Total cash available
Less cash disbursements:
Purchase of inventory
Selling and administrative expenses
Purchases of equipment
Total cash disbursements
Excess of cash available over disbursements
Financing:
Borrowing-note
Repayments-note
Interest
Total financing
Ending cash balance
$
0
0
0
0
0
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