Mail ( of sheet as of April 30 is given below April 30 $ 17,200 58,000 48,250 20

Question

Mail ( of sheet as of April 30 is given below April 30 $ 17,200 58,000 48,250 204,000 Accounts receivable $327,450 Liabilities and Stockholders' Equity Accounts payable Note payable $ 67,000 16,200 180,000 64,250 Retained eamings $ 327,450 The company is in the process of preparing a budget for May and has assembled the following data: a Sales are budgeted at $253,000 for May. Of these sales, $75,900 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 b. Purchases of inventory are expected to total $140,000 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 payable to suppliers will be paid during May c. The May 31 inventory balance is at $47,000 d. Selling and administrative e. The note payable on the Apri 30 balance sheet will be paid during May, with $300 in interest. (All of the t. New 9. During May, the company will borrow $25,400 from its bank by giving a new note payable to the bank for for May are budgeted at $93,000, exclusive of depreciation. These will be paid in cash to May) interest costing $11,100 will be purchased for cash during May. that amount. The new note will be due in one year

Explanation / Answer

1a Schedule of expected cash collections Amount $ Cash sales May $75,900 Coll. On AR: april 58000 may 88550 Total cash receipts $222,450 Schedule of expected cash disbursements: AP - April 67000 may purchase 56000 Total cash payments 123000 Cash Budget: Beginning cash bal 17200 add: collections 222450 Total cash available 239650 Less: Cash disbursement: Purchases 123000 Sell & Ad expen 93000 Purchase of equip 11100 Total cash disbursements 227100 Excess of cash available over disbursements 12550 Financing : Borrowing 25400 Repayment -16200 Interest -300 Total financing 8900 Ending Cash Balance 21450 Budgeted Income Statement: Sales 253000 Less: COGS: Opening 48250 Purchase 140000 Less: close -47000 COGS 141250 Gross Profit 111750 Less: Exp.: Sell& Adm. 93000 Dep 2850 interest 300 Total exp 96150 Net Income 15600 Balance Sheet as on May 31: Assets: Cash 21450 AR 88550 Inventory 47000 Build & equip net dep 212250 204000+11100-2850=212250 Total Assets 369250 Liabilities: AP 84000 140000-56000=84000 NP 25400 CS 180000 RE 79850 64250+15600=79850 Total Liabilities 369250

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