Minden Company is a wholesale distributor of premium Europeanchocolates. The company’s balance sheet as of April 30 is givenbelow: Minden Company Balance Sheet April 30 Assets Cash $ 10,500Accounts receivable 57,000 Inventory 42,500 Buildings andequipment, net of depreciation 236,000 Total assets $ 346,000Liabilities and Stockholders’ Equity Accounts payable $ 72,750 Notepayable 21,200 Common stock 180,000 Retained earnings 72,050 Totalliabilities and stockholders’ equity $ 346,000 The company is inthe process of preparing a budget for May and has assembled thefollowing data: Sales are budgeted at $296,000 for May. Of thesesales, $88,800 will be for cash; the remainder will be creditsales. One-half of a month’s credit sales are collected in themonth the sales are made, and the remainder is collected in thefollowing month. All of the April 30 accounts receivable will becollected in May. Purchases of inventory are expected to total$192,000 during May. These purchases will all be on account. Fortypercent of all purchases are paid for in the month of purchase; theremainder are paid in the following month. All of the April 30accounts payable to suppliers will be paid during May. The May 31inventory balance is budgeted at $51,500. Selling andadministrative expenses for May are budgeted at $98,700, exclusiveof depreciation. These expenses will be paid in cash. Depreciationis budgeted at $2,150 for the month. The note payable on the April30 balance sheet will be paid during May, with $220 in interest.(All of the interest relates to May.) New refrigerating equipmentcosting $6,800 will be purchased for cash during May. During May,the company will borrow $23,200 from its bank by giving a new notepayable to the bank for that amount. The new note will be due inone year. Required: 1. Calculate the expected cash collections forMay. 2. Calculate the expected cash disbursements for merchandisepurchases for May. 3. Prepare a cash budget for May. 4. Prepare abudgeted income statement for May. 5. Prepare a budgeted balancesheet as of May 31.
