Deacon Company is a merchandising company that is preparing a budget for the second quarter of the calendar year. The following Information is available DEACON COMPANY Balance Sheet March 31 Assets Cash $ 54,000 Accounts receivable 40,000 Inventory 45,000 Plant and equipment, net of depreciation 90,000 Total assets $229,000 Liabilities and Shareholders' Equity Accounts payable $ 51,000 Connon shares 79,000 Retained earnings 99,000 Total liabilities and shareholders' equity $229,000 Budgeted Income Statements Sales Cost of goods sold Gross sargin Setting and administrative expenses Operating income April 592,000 53,000 39.000 12,000 $27.000 May $114,000 62,000 52.000 11.000 $41.000 June $137,000 85,000 52,000 10,000 $42.000 a. Sixty percent of sales are cash sales and 40 percent of sales are credit sales. Twenty percent of all credit sales are collected in the month of sale and the remaining 80 percent are collected in the month subsequent to the sale. b. Budgeted sales for July are $133.000 6 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. d. Each month's ending merchandise Inventory should equal $13,000 plus 50% of the next month's cost of goods sold. e. Depreciation expense is $1,400 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 30. (Hint: You need to calculate the cash pald for selling and administrative expenses Guring April, May, and June to determine the cash balance in your June 30 balance sheet) Complete this question by entering your answers in Calculate the expected cash collections for April, May, and June April Total cash collections May June Quarter Required 2 > Calculate the budgeted merchandise purchases for April, May, and June. April Budgeted merchandise purchases May June Quarter Required 1 Required 3 > Calculate the expected cash disbursements for merchandise purchases for April, May, and June. Budgeted cash disbursements for merchandise purchases April May June Quartet Required 2 Required 3 Required 4 Prepare a budgeted balance sheet at June 30. (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 30 balance sheet.) Deacon Company Balance Sheet June 30 Assets Total assets $ Liabilities and Shareholders' Equity 0 Total liabilities and stockholders' equity 0
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