Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of April 30 is given below: Minden Company Balance Sheet April 30 Assets Cash $ 14,300 Accounts receivable 55,750 Inventory 49,250 Buildings and equipment, net of depreciation 217,000 Total assets $ 336,300 Liabilities and Stockholders’ Equity Accounts payable $ 65,000 Note payable 16,500 Common stock 180,000 Retained earnings 74,800 Total liabilities and stockholders’ equity $ 336,300 The company is in the process of preparing a budget for May and has assembled the following data: Sales are budgeted at $292,000 for May. Of these sales, $87,600 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 $216,000 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. The May 31 inventory balance is budgeted at $72,500. Selling and administrative expenses for May are budgeted at $82,200, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $4,500 for the month. The note payable on the April 30 balance sheet will be paid during May, with $375 in interest. (All of the interest relates to May.) New refrigerating equipment costing $7,100 will be purchased for cash during May. During May, the company will borrow $20,500 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: Calculate the expected cash collections from customers for May. Calculate the expected cash disbursements for merchandise purchases for May. Prepare a cash budget for May. Prepare a budgeted income statement for May. Prepare a budgeted balance sheet as of May 31.

Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of April 30 is given below: Minden Company Balance Sheet April 30 Assets Cash $ 14,300 Accounts receivable 55,750 Inventory 49,250 Buildings and equipment, net of depreciation 217,000 Total assets $ 336,300 Liabilities and Stockholders’ Equity Accounts payable $ 65,000 Note payable 16,500 Common stock 180,000 Retained earnings 74,800 Total liabilities and stockholders’ equity $ 336,300 The company is in the process of preparing a budget for May and has assembled the following data: Sales are budgeted at $292,000 for May. Of these sales, $87,600 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 $216,000 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. The May 31 inventory balance is budgeted at $72,500. Selling and administrative expenses for May are budgeted at $82,200, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $4,500 for the month. The note payable on the April 30 balance sheet will be paid during May, with $375 in interest. (All of the interest relates to May.) New refrigerating equipment costing $7,100 will be purchased for cash during May. During May, the company will borrow $20,500 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: Calculate the expected cash collections from customers for May. Calculate the expected cash disbursements for merchandise purchases for May. Prepare a cash budget for May. Prepare a budgeted income statement for May. Prepare a budgeted balance sheet as of May 31.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter4: Internal Control And Cash

Section: Chapter Questions

Problem 66.2C

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Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of April 30 is given below:

Minden Company Balance Sheet April 30
Assets
Cash	$ 14,300
Accounts receivable	55,750
Inventory	49,250
Buildings and equipment, net of depreciation	217,000
Total assets	$ 336,300
Liabilities and Stockholders’ Equity
Accounts payable	$ 65,000
Note payable	16,500
Common stock	180,000
Retained earnings	74,800
Total liabilities and stockholders’ equity	$ 336,300

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

Sales are budgeted at $292,000 for May. Of these sales, $87,600 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 $216,000 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.
The May 31 inventory balance is budgeted at $72,500.
Selling and administrative expenses for May are budgeted at $82,200, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $4,500 for the month.
The note payable on the April 30 balance sheet will be paid during May, with $375 in interest. (All of the interest relates to May.)
New refrigerating equipment costing $7,100 will be purchased for cash during May.
During May, the company will borrow $20,500 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:

Calculate the expected cash collections from customers for May.
Calculate the expected cash disbursements for merchandise purchases for May.
Prepare a cash budget for May.
Prepare a budgeted income statement for May.
Prepare a budgeted balance sheet as of May 31.

Req 1 and 2
Req 3
Req 4
Req 5
Prepare a budgeted balance sheet as of May 31.
Minden Company
Budgeted Balance Sheet
May 31
Assets
Liabilities and Stockholders' Equity
Total assets
Total liabilities and stockholders' equity

Req 1 and 2
Req 3
Req 4
Req 5
Prepare a cash budget for May. (Cash deficiency, repayments and interest should be indicated by a minus sign.)
Minden Company
Cash Budget
For the Month of May
Beginning cash balance
Add collections from customers
Total cash available
Less cash disbursements:
Purchase of inventory
Selling and administrative expenses
Purchases of equipment
Total cash disbursements
Excess of cash available over disbursements
Financing:
Borrowing-note
Repayments-note
Interest
Total financing
Ending cash balance

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