Deacon Company Balance Sheet March 31 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $ 61,400 32,400 58,300 148,000 $ 300,100 $ 105, 100 70,000 125,000 5300, 100 Budgeted Income Statements Sales Cast of goods sold Gross margin Selling and administrative expenses Net operating income Budgeting Assumptions: April $ 161,000 96,600 54,400 18,300 5.46,100 May $ 171,000 102,600 68,400 19.800 $ 48,600 June $191,00 114,600 76,400 22,800 $ 53,500 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 $201.000. 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 $1.200 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) Deacon Company Balance Sheet March 31 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $ 61, 480 312 400 581300 148008 $ Bee, 100 $ 105, 100 70,000 125.000 300, 100 Budgeted Income Statements Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income April $ 161, eee 96,600 64,400 18,300 $ 46, 100 May $ 171,00 102 600 68,488 19 800 $ 48,600 June $191,000 114,600 76,400 22.800 $ 58,600 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 $201.000, 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 $1.200 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 duning April, May, and June to determine the cash balance in your June 30th balance sheet)
