90.2K

Verified Solution

Link Copied!

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 $ 9,600 Accounts receivable 54,750 Inventory 53,750 Buildings and equipment, net of depreciation 214,000 Total assets $ 332,100 Liabilities and stockholders' Equity Accounts payable $ 70,500 Note payable 18,100 Common stock 180,000 Retained earnings 63,500 Total liabilities and stockholders' equity $ 332,100 The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $257,000 for May, of these sales, $77,100 will be for cash; the remainder will be credit sales. One-half of a month's credit sales are collected in the month the 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. Inventory purchases are expected to total $121,000 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. AAAA a. Sales are budgeted at $257,000 for May. Of these sales. $77100 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. Inventory purchases are expected to total $121,000 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 $31,000. d. Selling and administrative expenses for May are budgeted at $83,700, excluding depreciation. These expenses will be plaid in cash. Depreciation is budgeted at $2,800 for the month. e. New refrigerating equipment costing $13,100 will be purchased for cash during May. f. The note payable on the April 30 balance sheet will be paid during May, with $340 in interest. (All of the interest relates to May) 9. During May, the company will borrow $22,000 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. Calculate the expected cash collections from customers for May. 2. Calculate the expected cash disbursements for merchandise purchases for May. 3. Prepare a cash budget for May. (Hint: In the financing section, make sure to denote cash outflows as negative numbers. In the cash disbursements section, the cash outflows should be written as positive numbers. I know this seems counterintuitive accountants tend to write costs as positive numbers if they are listed in a section of the financial statements that is already labeled as "rnete nr "ovnoncoe"nrichurcomente" herance then I now they are all utflue Rid in a cartinn whore infinue and flowe

Answer & Explanation Solved by verified expert

See Answer