Reference no: EM132922149
Question - Refer to the data for Minden Company. The company is considering making the following changes to the assumptions underlying its Master Budget:
1. Sales are budgeted for $220,000 for May.
2. Each month's credit sales are collected 60% in the month of sale and 40% in the month following the sale.
3. The company pays for 50% of its merchandise purchases in the month of the purchase and the remaining 50% in the month following the purchase. All other information from Problem 8-19 that is not mentioned above remains the same.
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 Depreciation 207,000
Total assets $300,000
Liabilities and Stockholders' Equity
Accounts Payable $63,000
Note payable 14,500
Common stock 180,000
Retained Earnings 42,500
Total liabilities and stockholders' equity $300,000
Required - Using the new assumptions described above, complete the following requirements:
1. Calculate the expected cash collections for May.
2. Calculate the expected cash disbursements for merchandise purchases for May.
3. Please make a Cash Budget for May.
4. Using Schedule 9 as your guide, please make a budgeted Income Statement for May.
5. Make a budgeted balance sheet as of May 31.