Problem-solving 1: Cash Budget; Income Statement; Balance SheetMinden Company is a wholesale distributor of premium European chocolates. The company's balancesheet as of April 30 is given below:Minden CompanyBalance SheetApril 30AssetsCashAccounts receivableInventoryBuildings and equipment, net of depreciation.Total assetsf.g.Liabilities and Stockholders' EquityAccounts payableNote payableCommon stockRetained earningsTotal liabilities and stockholders' equity$ 9,00054.00030,000207,000$300,000$ 63,00014,500180,00042,500$300,000The company is in the process of preparing a budget for May and has assembled the following data:a. Sales are budgeted at $200,000 for May. Of these sales, $60,000 will be for cash; the remainder willbe credit sales. One-half of a month's credit sales are collected in the month the sales are made, andthe remainder is collected in the following month. All of the April 30 accounts receivable will becollected in May.b. Purchases of inventory are expected to total $120,000 during May. These purchases will all be onaccount. Forty percent of all purchases are paid for in the month of purchase; the remainder are paidin the following month. All of the April 30 accounts payable to suppliers will be paid during May.The May 31 inventory balance is budgeted at $40,000.C.d. Selling and administrative expenses for May are budgeted at $72,000, exclusive of depreciation.These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month.The note payable on the April 30 balance sheet will be paid during May, with $100 in interest. (All ofthe interest relates to May.)New refrigerating equipment costing $6.500 will be purchased for cash during May.During May, the company will borrow $20,000 from its bank by giving a new note payable to thebank for that amount. The new note will be due in one year.Required:1.Prepare a cash budget for May. Support your budget with a schedule of expected cash collections fromsales and a schedule of expected cash disbursements for merchandise purchases.2.3.Prepare a budgeted income statement for May. Use the absorption costing income statement format asshown in Schedule 9.Prepare a budgeted balance sheet as of May 31.

A cash budget helps in predicting expected cash inflows and outflows for the future period. If a…

Required: 1. Prepare a cash budget for May. Support your budget with a schedule of expected cash collections from sales and a schedule of expected cash disbursements for merchandise purchases. 2. Prepare a budgeted income statement for May. Use the absorption costing income statement format as shown in Schedule 9. 3. Prepare a budgeted balance sheet as of May 31.

Required: 1. Prepare a cash budget for May. Support your budget with a schedule of expected cash collections from sales and a schedule of expected cash disbursements for merchandise purchases. 2. Prepare a budgeted income statement for May. Use the absorption costing income statement format as shown in Schedule 9. 3. Prepare a budgeted balance sheet as of May 31.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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