Minden Company is a wholesale distributor of premium European chocolates. The company’s balancesheet as of April 30 is given below:Minden CompanyBalance SheetApril 30AssetsCash ................................................................................................... $ 9,000Accounts receivable ........................................................................... 54,000Inventory ............................................................................................ 30,000Buildings and equipment, net of depreciation .................................... 207,000Total assets ........................................................................................ $300,000Liabilities and Stockholders’ EquityAccounts payable ............................................................................... $ 63,000Note payable ...................................................................................... 14,500Capital stock, no par .......................................................................... 180,000Retained earnings .............................................................................. 42,500Total liabilities and stockholders’ equity ............................................. $300,000The company is in the process of preparing budget data for May. A number of budget items have alreadybeen prepared, as stated below:a. Sales are budgeted at $200,000 for May. Of these sales, $60,000 will be for cash; the remainder willbe credit sales. One-half of a month’s credit sales are collected in the month the sales are made, andthe remainder is collected in the following month. All of the April 30 accounts receivable will becollected in May.b. Purchases of inventory are expected to total $120,000 during May. These purchases will all be onaccount. Forty percent of all purchases are paid for in the month of purchase; the remainder are paidin the following month. All of the April 30 accounts payable to suppliers will be paid during May.c. The May 31 inventory balance is budgeted at $40,000.d. Selling and administrative expenses for May are budgeted at $72,000, exclusive of depreciation. Theseexpenses will be paid in cash. Depreciation is budgeted at $2,000 for the month.e. The note payable on the April 30 balance sheet will be paid during May, with $100 in interest. (All ofthe interest relates to May.)f. New refrigerating equipment costing $6,500 will be purchased for cash during May.g. During May, the company will borrow $20,000 from its bank by giving a new note payable to thebank for that amount. The new note will be due in one year.Required:1. Prepare a cash budget for May. Support your budget with a schedule of expected cash collections from sales and a schedule of expected cash disbursements for merchandise purchases.2. Prepare a budgeted income statement for May. Use the absorption costing income statement format asshown in Schedule 9.3. 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 ................................................................................................... $ 9,000
Accounts receivable ........................................................................... 54,000
Inventory ............................................................................................ 30,000
Buildings and equipment, net of
Total assets ........................................................................................ $300,000
Liabilities and
Accounts payable ............................................................................... $ 63,000
Note payable ...................................................................................... 14,500
Capital stock, no par .......................................................................... 180,000
Retained earnings .............................................................................. 42,500
Total liabilities and stockholders’ equity ............................................. $300,000
The company is in the process of preparing budget data for May. A number of budget items have already
been prepared, as stated below:
a. Sales are budgeted at $200,000 for May. Of these sales, $60,000 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.
b. Purchases of inventory are expected to total $120,000 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.
c. The May 31 inventory balance is budgeted at $40,000.
d. Selling and administrative expenses for May are budgeted at $72,000, exclusive of depreciation. These
expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month.
e. The note payable on the April 30 balance sheet will be paid during May, with $100 in interest. (All of
the interest relates to May.)
f. New refrigerating equipment costing $6,500 will be purchased for cash during May.
g. During May, the company will borrow $20,000 from its bank by giving a new note payable to the
bank for that amount. The new note will be due in one year.
Required:
1. Prepare a
2. Prepare a
shown in Schedule 9.
3. Prepare a budgeted balance sheet as of May 31.
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