The balance sheet of Snapshot, Inc., a distributor of photographic supplies, as
ID: 2393572 • Letter: T
Question
The balance sheet of Snapshot, Inc., a distributor of photographic supplies, as of May 31 is given below: Snapshot, Inc. Balance Sheet May 31 Assets $ 9,000 Accounts receivable Inventory Buildings and equipment, net of depreciation 35,000 550,000 Total assets 671,000 Liabilities and Stockholders' Equity Accounts payable Note payable Capital stock Retained earnings $101,000 20,000 470,000 80,000 Total liabilities and stockholders' equity $671,000 The company is in the process of preparing a budget for June and has assembled the following data: a. Sales are budgeted at $300,000 for June. Of these sales, $70,000 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 the following month. All of the May 31 accounts receivable will be collected in June b. Purchases of inventory are expected to total $190,000 during June. These purchases will all be on account. Forty percent of all inventory purchases are paid for in the month of purchase; the remainder The June 30 inventory balance is budgeted at $30,000 expenses will be paid in cash. Depreciation is budgeted at $2,500 for the month. expense for June (on all borrowing) will be $800, which will be paid in cash. c. d. Selling and administrative expenses for June are budgeted at $66,000, exclusive of depreciation. These e. The note payable on the May 31 balance sheet will be paid during June. The company's interest f. New warehouse equipment costing $12,000 will be purchased for cash during June. g. During June, the company will borrow $23,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.Explanation / Answer
Answer 1-a Snapshot Inc. Schedule of Expected Cash Collections June Cash Sales - June 70,000.00 Collection from Accounts Receivables: May 31, Balance 77,000.00 June - $230,000 X 50% 115,000.00 Total cash Collections 262,000.00 Snapshot Inc. Schedule of Expected Cash Disbursements April May 31 - Accounts Payable Balance 101,000.00 June Purchases - $190,000 X 40% 76,000.00 Total Cash Payment 177,000.00 Answer 1-b. Snapshot Inc. Cash budget April Cash Balance, Beginning 9,000.00 Add: receipts From Customers 262,000.00 Total Cash available 271,000.00 Less: Disbursements Purchase of Inventory 177,000.00 Selling & Admn. Exp. 66,000.00 Purchase of Equipment 12,000.00 Total Disbursement 255,000.00 Excess of Receipts over Disbursements 16,000.00 Financing: Borrowings - Note 23,000.00 Repayment-Note (20,000.00) Interest (800.00) Total Financing 2,200.00 Cash Balance, Ending 18,200.00 Answer 2. Snapshot Inc. Budgeted Income Statement For the Month of June Sales 300,000.00 Cost of Goods Sold: Beginning Inventory 35,000.00 Add: Purchases 190,000.00 Goods Available for Sale 225,000.00 Less: Ending Inventory 30,000.00 Cost of Goods Sold 195,000.00 Gross Margin 105,000.00 Selling & Admn. Expenses ($66,000 + $2,500) 68,500.00 Operating Profit 36,500.00 Interest Expenses 800.00 Net Income (Loss) 35,700.00 Answer 3. Snapshot Inc. Balance Sheet June 30 Assets Current Assets Cash 18,200.00 Accounts receivables 115,000.00 Inventory 30,000.00 163,200.00 Property, Plant & Equipment Building & Equipment - $550,000 + $12,000 562,000.00 Less: Dep. (2,500.00) 559,500.00 Total Assets 722,700.00 Liabilities & Stockholders' Equity Liabilities Accounts Payable - $190,000 X 60% 114,000.00 Note Payable 23,000.00 137,000.00 Total liabilities 137,000.00 Shareholders's Equity Capital Stock 470,000.00 Retained Earnings - $80,000 + $35,700 115,700.00 Total Stockholders equity 585,700.00 Total liabilities & Stockholders' Equity 722,700.00
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