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 $ 9,500 56,500 53,250 234,000 $ 353,250 Liabilities and Stockholders' Equity Accounts payable 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: $ 79,000 20,000 180,000 74,250 $ 353,250 a. Sales are budgeted at $299,000 for May. Of these sales, $89,700 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 $169,000 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 $42,000. d. Selling and administrative expenses for May are budgeted at $89,700, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,250 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $320 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $7,200 will be purchased for cash during May. g. During May, the company will borrow $25,200 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 $ 9,500 56,500 53,250 234,000 $ 353,250 Liabilities and Stockholders' Equity Accounts payable 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: $ 79,000 20,000 180,000 74,250 $ 353,250 a. Sales are budgeted at $299,000 for May. Of these sales, $89,700 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 $169,000 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 $42,000. d. Selling and administrative expenses for May are budgeted at $89,700, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,250 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $320 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $7,200 will be purchased for cash during May. g. During May, the company will borrow $25,200 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
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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
Minden Company
Balance Sheet
April 30
Accounts receivable
Inventory
Buildings and equipment, net of depreciation
Total assets
Liabilities and Stockholders' Equity
Accounts payable
$ 9,500
56,500
53, 250
234,000
$ 353,250
$ 79,000
20,000
180,000
74,250
$ 353,250
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 $299,000 for May. Of these sales, $89,700 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 $169,000 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 $42,000.
d. Selling and administrative expenses for May are budgeted at $89,700, exclusive of depreciation. These expenses will
be paid in cash. Depreciation is budgeted at $2,250 for the month.
e. The note payable on the April 30 balance sheet will be paid during May, with $320 in interest. (All of the interest relates
to May.)
f. New refrigerating equipment costing $7,200 will be purchased for cash during May.
g. During May, the company will borrow $25,200 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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