Sales are budgeted at 231000 for May Of these sales 69300 wi

  

Sales are budgeted at $231,000 for May. Of these sales, $69,300 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.

Purchases of inventory are expected to total $139,000 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.

Selling and administrative expenses for May are budgeted at $83,400, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $6,200 for the month.

The note payable on the April 30 balance sheet will be paid during May, with $155 in interest. (All of the interest relates to May.)

During May, the company will borrow $24,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.

  

he company is in the process of preparing a budget for May and has assembled the following data:

Minden Company is a wholesale distributor of premium European chocolate sheet as of April 30 iS given below: Minden Company Balance Sheet April 30 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation $ 12,000 77,500 42,000 225,000 Total assets $ 356,500 Liabilities and Stockholders\' Equity Accounts payable Note payable Common stock Retained earnings $ 78,250 19,300 180,000 78,950 Total liabilities and stockholders\' equity $ 356,500

Solution

minden company Schedule of expected cash collections Cash Sales - May 69300 Collections On accounts Receivables April 30 balance 77500 May sales 80850 Total Cash Receipts 227650 Schedule of expected cash disbursments April 30 accounts payable balance 78250 May Purchase 139000*0.4 55600 Total Cash Payaments 133850 1-a. Schedule of cash receipts: Collections on account receivable for May sales = (231000-69300) = 50% × $161,700 = $80,850 Minden Company Cash Budget For the month of May Beginning cash Balance 12000 Add: Collections from customers 227650 Total Cash Available 239650 Less Cash Disbursments Purchse of inventory 133850 Selling and administrative expense 83400 Purchase of equipment 12500 Total Cash Disbursments 229750 Excess of cash available over disbursments 9900 Financing Borrowing Note 24000 Repaying Note -19300 Interest 155 Total Financing 4855 Ending Cash Balance 14755 Minden Company Budgeted Income Statement For the month of May Sales 231000 Cost of goods sold Beginning Inventory 42000 Purchases 139000 Goods available for sale 181000 Ending Inventory 55000 Cost of goods sold 126000 Gross Margin 105000 Selling and administrative Expense (83400+6200) 89600 Net Operating Income 15400 Interest Expense 155 Net Income 15555 Minden Company Balance Sheet For the month of May Assets Cash 14755 Accounts Receivable 80850 Inventory 55000 Buildings and equipment , net of dep (225000+12500-6200) 231300 Total Assets 381905 Liabilities and Stockholder\'s Equity Accounts Payable (139000*.6) 83400 Note Payable 24000 Common stock 180000 Retained Earnnings (78950+1555) 94505 Total Liabilities 381905