The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $294,000 for May. Of these sales, $88,200 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 $211,000 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 $77,000. d. Selling and administrative expenses for May are budgeted at $96,900, exclusive of depreciation: These expenses will be paid in cash. Depreciation is budgeted at $5,000 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $360 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $8,800 will be purchased for cash during May. g. During May, the company will borrow $20,900 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.
The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $294,000 for May. Of these sales, $88,200 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 $211,000 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 $77,000. d. Selling and administrative expenses for May are budgeted at $96,900, exclusive of depreciation: These expenses will be paid in cash. Depreciation is budgeted at $5,000 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $360 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $8,800 will be purchased for cash during May. g. During May, the company will borrow $20,900 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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![Problem 8-19 (Algo) Cash Budget; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-8, LO8-9, LO8-
10]
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
$ 15,000
78,000
37,750
232,000
$ 362,750
$ 81,500
14,000
180,000
87,250
$362,750
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 $294,000 for May. Of these sales, $88,200 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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4d6fa1e9-36c0-4861-8dbf-8c72fa6219f2%2Fd9c5d22a-d4fc-4a3c-8b7c-c507c6555039%2F0gk2cwe_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 8-19 (Algo) Cash Budget; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-8, LO8-9, LO8-
10]
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
$ 15,000
78,000
37,750
232,000
$ 362,750
$ 81,500
14,000
180,000
87,250
$362,750
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 $294,000 for May. Of these sales, $88,200 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
Transcribed Image Text:The company is in the process of preparing a budget for May and has assembled the following data:
a. Sales are budgeted at $294,000 for May. Of these sales, $88,200 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 $211,000 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 $77,000.
d. Selling and administrative expenses for May are budgeted at $96,900, exclusive of depreciation: These expenses will be paid in
cash. Depreciation is budgeted at $5,000 for the month.
e. The note payable on the April 30 balance sheet will be paid during May, with $360 in interest. (All of the interest relates to May.)
f. New refrigerating equipment costing $8,800 will be purchased for cash during May.
g. During May, the company will borrow $20,900 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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