1. To determine: The expected cash collection for May Introduction: Net sales means the revenue that a company generates from the sales after deducting the amount of sales allowance, sales returns, and sales discount Solution: M. company Expected cash collection from sales Particulars Calculations Amount($) Cash sales of May 60,000 Collection of account receivable of April 54,000 Cash from may credit sale ( $ 160 , 000 × 60 % ) 96,000 Total cash receipts 210,000 Table (1) Hence, $210,000 is the total receipts of sales. 2. To determine: Te expected cash disbursement for merchandise purchase Introduction: Net sales means the revenue that a company generates from the sales after deducting the amount of sales allowance, sales returns, and sales discount Solution: M. company Expected cash disbursements for merchandise purchases Particulars Calculations Amount($) Payment of Account payables balance as on April 30 63,000 Payment of May’s credit purchases ( $ 120 , 000 × 50 % ) 60,000 Total cash disbursements 123,000 Table (2) Hence, $123,000 is the total cash disbursements. 3. To prepare: Cash budget for May Introduction: Net sales means the revenue that a company generates from the sales after deducting the amount of sales allowance, sales returns, and sales discount Solution: M. company Cash budget for the month of May Particulars Amount($) Beginning cash balance 9,000 Add: Cash collection 210,000 Total cash Available A 219,000 Less: Cash disbursements For merchandise 123,000 For selling and administrative expenses 72,000 For equipment 6,500 Total cash disbursement B 201,500 Excess (deficiency) of cash ( C ) = ( A ) − ( B ) 17,500 Financing: Borrowings D 20,000 Repayments E (14,500) Interest F (100) Ending cash balance C + D + E + F 22,900 Table (3) Hence, the expected ending cash balance is $22,900. 4. To prepare: The income statement for May Introduction: Net sales means the revenue that a company generates from the sales after deducting the amount of sales allowance, sales returns, and sales discount Solution: M. company Budget income statement For the month ended May 31 Particulars Amount($) Budgeted sales 220,000 Less: Cost of goods sold 110,000 Gross profit 110,000 Less: Selling and administrative expenses 72,000 Depreciation 2,000 Interest 100 Net income 35,900 Table (4) Working notes: Calculate the amount of cost of goods sold, Cost of goods sold = ( Opening balance of inventory + Budgeted purchase − Budgeted closing inventory ) = $ 30 , 000 + $ 120 , 000 − $ 40 , 000 = $ 110 , 000 Hence, the net income of the M. Company is $15,900. 5. To prepare: Balance sheet for May Introduction: Net sales means the revenue that a company generates from the sales after deducting the amount of sales allowance, sales returns, and sales discount Solution: M. company Balance sheetAs at May 31 Particulars Calculations Amount($) Current assets Cash 22,900 Account receivable ( $ 220 , 000 − $ 60 , 000 ) × 40 % 64,000 Inventory 40,000 Fixed Assets Building and equipment ( $ 207 , 000 + $ 6 , 500 − $ 2 , 000 ) 211,500 Total assets 338,400 Liability and stockholder’s equity Stockholder’s equity Capital stock 180,000 Retained earnings ( $ 42 , 500 + 35 , 900 ) 78,400 Total stockholder’s equity 258,400 Accounts payable ( $ 120 , 000 × 50 % ) 60,000 Notes payable 20,000 Total liabilities and stockholders’ equity 338,400 Table (4) Hence, the balance of the balance sheet is $338,400.

Question

Want to see the full answer?

Answer 1

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Quick answer of this accounting questions

Mead Incorporated began operations in Year 1. Following is a series of transactions and events involving its long-term debt investments in available-for-sale securities. Year 1 January 20 Purchased Johnson & Johnson bonds for $20,500. February 9 Purchased Sony notes for $55,440. June 12 Purchased Mattel bonds for $40,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $23,500. July 5 Sold all of the Mattel bonds for $35,850. July 22 Purchased Sara Lee notes for $13,500. August 19 Purchased Kodak bonds for $15,300. December 31 Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000. Year 3 February 27 Purchased Microsoft bonds for $160,800. June 21 Sold all of the Sony notes for $57,600. June 30 Purchased Black & Decker bonds for $50,400. August 3 Sold all of the Sara…

What is the ending inventory?