1. The budgeted expected cash collections from customers for May.2. The budgeted expected cash disbursements for merchandise purchases for May.3. The cash budgeted for May. Modern Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given below:AssetsCash$14,500Accounts receivableInventory72,75031,750209,000$ 328,000Buildings and equipment, net of depreciationTotal assetsLiabilities and Stockholders' EquityAccounts payableNote payableCommon stock$ 69,500$16,000180,00062,500$328,000Retained earningsTotal liabilities and stockholders' equityThe company is in the process of preparing a budget for May and has assembled the following data:Sales are budgeted at $247,000 for May. Of these sales, $74,100 will be for cash; the remainder will be credit sales. One-half of a month's credit sales are collected in the month the salesare 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 $172,000 during May. These purchases will all be on account. Forty percent of all purchases are paid for in the month of purchase; theremainder are paid in 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 $58,500.Selling and administrative expenses for May are budgeted at $87,600, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $6,850 for the month.The note payable on the April 30 balance sheet will be paid during May, with $400 in interest. (All of the interest relates to May.)New refrigerating equipment costing $13,400 will be purchased for cash during May.During May, the company will borrow $22,900 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.

Budgets are the estimates or forecasts that are made for future period of time. Some budgets that…

Answered: 1. The budgeted expected cash…

1. The budgeted expected cash collections from customers for May. 2. The budgeted expected cash disbursements for merchandise purchases for May. 3. The cash budgeted for May.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 6MCQ

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