Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given below: Minden Company Balance Sheet April 30 Assets $ 14,600 55,000 43,500 Cash Accounts receivable Inventory 223,000 $ 336,100 Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Note payable Common stock $ 74,500 15,000 180,000 66,600 $ 336, 100 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 $244,000 for May. Of these sales, $73,200 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 $130,000 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 $40,500. d. Selling and administrative expenses for May are budgeted at $84,300, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $3,950 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $430 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $7,800 will be purchased for cash during May. g. During May, the company will borrow $20,700 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.
Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given below: Minden Company Balance Sheet April 30 Assets $ 14,600 55,000 43,500 Cash Accounts receivable Inventory 223,000 $ 336,100 Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Note payable Common stock $ 74,500 15,000 180,000 66,600 $ 336, 100 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 $244,000 for May. Of these sales, $73,200 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 $130,000 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 $40,500. d. Selling and administrative expenses for May are budgeted at $84,300, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $3,950 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $430 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $7,800 will be purchased for cash during May. g. During May, the company will borrow $20,700 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.
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:
Minden Company
Balance Sheet
April 30
Assets
$ 14,600
55,000
43,500
223,000
$ 336,100
Cash
Accounts receivable
Inventory
Buildings and equipment, net of depreciation
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Note payable
$ 74,500
15,000
180,000
Common stock
Retained earnings
66,600
$ 336,100
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 $244,000 for May. Of these sales, $73,200 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 $130,000 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 $40,500.
d. Selling and administrative expenses for May are budgeted at $84,300, exclusive of
depreciation. These expenses will be paid in cash. Depreciation is budgeted at
$3,950 for the month.
e. The note payable on the April 30 balance sheet will be paid during May, with $430 in
interest. (All of the interest relates to May.)
f. New refrigerating equipment costing $7,800 will be purchased for cash during May.
g. During May, the company will borrow $20,700 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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