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 $ $11,400$

Accounts receivable $75,000$

Inventory $41,000$

Buildings and equipment, net of depreciation $224,000$

Total assets $ $351,400$

Liabilities and Stockholders$$ Equity

Accounts payable $ $70,000$

Note payable $15,500$

Common stock $180,000$

Retained earnings $85,900$

Total liabilities and stockholders$$ equity $ $351,400$

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

Sales are budgeted at $$220,000$ for May. Of these sales, $$66,000$ 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.

Purchases of inventory are expected to total $$128,000$ 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 $$56,000.$

Selling and administrative expenses for May are budgeted at $$86,000,$ exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $$6,750$ for the month.

The note payable on the April $30$ balance sheet will be paid during May, with $$565$ in interest. $($All of the interest relates to May.$)$

New refrigerating equipment costing $$6,700$ will be purchased for cash during May.

During May, the company will borrow $$25,300$ 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.

$4.$ Prepare a budgeted income statement for May.

$5.$ Prepare a budgeted balance sheet as of May $31.$

Answer rating: 100% (QA)

1 Expected cash collections from customers for May Cash sales 66000 Credit sales 154000 220000 66000 ... View the full answer