Help 4 Minden Company is a wholesale distributor of premium

Help 4 Minden Company is a wholesale distributor of premium European chocolates. The company\'s balance sheet as of April 30 is given below S9,180 77,250 40,000 Buildings and equipment, net of depreciation Total assets Liabálities and 5tockholders\' Equity $ 79,756e 12,380 183,008 Retained earnings Total liabilities and stockholders\' equity s 365,350 The company is in the process of preparing a budget for May and has assembled the following data a. Sales are budgeted at $266,000 for May. Of these sales, $79 800 will be for cash: the remainder wil 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 ac receivable will be c b. Purchases of inventory are expected to total $170,000 during May These purchases will all be on account. Forty percent of all rchases are paid for in the month of purchase: the remainder are paid in the following month All of the Apri 30 accounts payable to suppliers will be paid during May c The May 31 inventory balance is budgeted at $44,500 d Sesih and dtion is bur ete at ss at ei 900 exclusive or deprecation. These expenses will b pald in e. The note payable on the April 30 balance sheet will be paid dunng May with S140 in interest (All of the interest relates to May) f. New refrigerating equipment costing $9,600 will be purchased for cash during May g. During May, the company will borrow $23,400 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year O Type here to search e2

Solution

1 Expected cash collections for May: Cash sales 79800 Credit sales-May (266000-79800)*1/2 93100 Accounts receivable-Apr 77250 Total 250150 2 Expected cash disbursement for merchandise purchase: May purchase (170000*40%) 68000 Accounts payable-Apr 79750 Total 147750 3 Cash budget $ Beginning cash balance 9100 Add:Collection from customers 250150 Total cash available 259250 Less: Cash disbursement Purchase of inventory 147750 Selling and administrarive expense 81900 Purchase of equipment 9600 Total cash disbursements 239250 Excess of cash available over disbursments 20000 Financing: Borrowing-Note 23400 Repayments-Note -12300 Interest -140 Total financing 10960 Ending cash balance 30960 4 Budgeted income statement $ Sales 266000 Less: cost of goods sold Beginning inventory 40000 Add: Purchases 170000 210000 Less: ending inventory 44500 165500 Gross profit 100500 Less: Selling and administrarive expense 81900 Depreciation 6450 Interest expense 140 88490 Net income 12010 5 Budgeted balance sheet Assets Cash 30960 Accounts receivable (266000-79800)*1/2 93100 Inventory 44500 Building and equipment (239000-6450+9600) 242150 Total assets 410710 Liabilities and stockholder\'s equity Accounts payable (170000*60%) 102000 Note payable 23400 Common stock 180000 Retained earnings (93300+12010) 105310 Total liabilities and stockholder\'s equity 410710