8-27 (Algo) Cash Collections; Cash Disbursements; Budgeted Balance Sheet [LO8-2, LO8-3, LO8-4, LO8-10] Deacon Company is a merchandising company that is preparing a budget for the three-month period ended June 30th. The following information is available Deacon Company Balance Sheet March 31 Assets Cashi Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets $ 62,000 43,600 46,000 107,000 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings $ 258,600 $ 63,600 70,000 125,000 Total liabilities and stockholders' equity $ 258,600 Budgeted Income Statements April Sales $120,000 May $130,000 June $150,000 Cost of goods sold 72,000 78,000 90,000 Gross margin 48,000 52,000 60,000 Selling and administrative expenses 24,900 26,400 29,400 Net operating income $ 23,100 $ 25,600 $ 30,600 Budgeting Assumptions: a. 60% of sales are cash sales and 40% of sales are credit sales. Twenty percent of all credit sales are collected in the month of sale and the remaining 80% are collected in the month subsequent to the sale. b. Budgeted sales for July are $160,000. c. 10% of merchandise inventory purchases are paid in cash at the time of the purchase. The remaining 90% of purchases are credit purchases. All purchases on credit are paid in the month subsequent to the purchase. The accounts payable at March 31 will be paid in April. d. Each month's ending merchandise inventory should equal $10,000 plus 50% of the next month's cost of goods sold. e. Depreciation expense is $1,900 per month. All other selling and administrative expenses are paid in full in the month the expense is incurred. Required: 1. Calculate the expected cash collections for April, May, and June. 2. Calculate the budgeted merchandise purchases for April, May, and June. 3. Calculate the expected cash disbursements for merchandise purchases for April, May, and June. 4. Prepare a budgeted balance sheet at June 30th. (Hint: You need to calculate the cash paid for selling and administrative expenses during April, May, and June to determine the cash balance in your June 30th balance sheet.) Calculate the expected cash collections for April, May, and June. Total cash collections April May June Quarter Calculate the budgeted merchandise purchases for April, May, and June. April Budgeted merchandise purchases May June Total Required 1 Required 2 Required 3 Required 4 Calculate the expected cash disbursements for merchandise purchases for April, May, and June. Budgeted cash disbursements for merchandise purchases April May June Quarter Required 1 Required 2 Required 3 Required 4 Prepare a budgeted balance sheet at June 30th. (Hint: You need to calculate the cash paid for selling and administrative expenses during April, May, and June to determine the cash balance in your June 30th balance sheet.) Deacon Company Balance Sheet June 30 Assets Total assets Liabilities and Stockholders' Equity Total liabilities and stockholders' equity