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 $ 59,000 Accounts receivable 43,000 Inventory 42,000 Plant and equipment, net of depreciation 109,000 Total assets $ 253,000 Liabilities and Shareholders Equity Accounts payable $ 51,000 Common shares 74,000 Retained earnings 128,000 Total liabilities and shareholders equity $ 253,000 Budgeted Income Statements April May June Sales $ 105,000 $ 120,000 $ 135,000 Cost of goods sold 63,000 72,000 81,000 Gross margin 42,000 48,000 54,000 Selling and administrative expenses 15,000 17,000 16,000 Operating income $ 27,000 $ 31,000 $ 38,000 Budgeting Assumptions 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 Budgeted sales for July are $139,000 while the budgeted cost of goods sold is 60 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 Each months ending merchandise inventory should equal $10,000 plus 50 of the next months cost of goods sold 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 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 )

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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

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	$	59,000
Accounts receivable		43,000
Inventory		42,000
Plant and equipment, net of depreciation		109,000
Total assets	$	253,000
Liabilities and Shareholders Equity
Accounts payable	$	51,000
Common shares		74,000
Retained earnings		128,000
Total liabilities and shareholders equity	$	253,000

Budgeted Income Statements
Budgeted Income Statements	April		May		June
Sales	$	105,000	$	120,000	$	135,000
Cost of goods sold		63,000		72,000		81,000
Gross margin		42,000		48,000		54,000
Selling and administrative expenses		15,000		17,000		16,000
Operating income	$	27,000	$	31,000	$	38,000

Budgeting Assumptions:

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.
Budgeted sales for July are $139,000 while the budgeted cost of goods sold is 60%.
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.
Each months ending merchandise inventory should equal $10,000 plus 50% of the next months cost of goods sold.
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 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.)