Deacon Company is a merchandising company that is preparing a budget for the second quarter ofthe calendar year. The following information is available. BEACON COMPANY
Deacon Company is a merchandising company that is preparing a budget for the second quarter ofthe calendar year. The following information is available. BEACON COMPANY Balance Sheet March 31 Assets Cash $ 64,000 Accounts receivable 28,000 Inventory 43,000 Plant and equipment, net of depreciation 92,000 Total assets $227,000 Liabilities and Shareholders' Equity Accounts payable $ 43,000 Common shares 66,000 Retained earnings 118,000 Total liabilities and shareholders' equity $227,000 ' Budgeted Income Statements April May June Sales $ 110,000 $ 117,000 $ 123,000 Cost of goods sold 66,000 70,200 73,800 Gross margin 44,000 46,800 49,200 Selling and administrative expenses 15,000 15,000 20,000 Operating income $ 29,000 $ 31,800 $ 29,200 Budgeting Assumptions: 3. 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 $126,000 while the budgeted cost of goods sold is 60%. 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. 0'. Each month's ending merchandise inventory should equal $14,000 plus 50% ofthe next month's cost of goods sold. e. Depreciation expense is $1,000 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.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Calculate the expected cash collections for April, May, and June. Total cash collections as 97,200 $ 114,760 _- Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Calculate the budgeted merchandise purchases for April, May, and June. Budgeted merchandise purchases Complete this question by entering your answers in the tabs below. 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 Complete this question by entering your answers in the tabs below. Required 1 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.)
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