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 $ 65,000 Accounts receivable 39,000 Inventory 49,000 Plant and equipment, net of depreciation 98,000 Total assets $ 251,000 Liabilities and Shareholders Equity Accounts payable $ 47,000 Common shares 63,000 Retained earnings 141,000 Total liabilities and shareholders equity $ 251,000 Budgeted Income Statements April May June Sales $ 107,000 $ 120,000 $ 138,000 Cost of goods sold 64,200 72,000 82,800 Gross margin 42,800 48,000 55,200 Selling and administrative expenses 14,000 10,000 15,000 Operating income $ 28,800 $ 38,000 $ 40,200 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 $143,000 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 $1,500 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	$	65,000
Accounts receivable		39,000
Inventory		49,000
Plant and equipment, net of depreciation		98,000
Total assets	$	251,000
Liabilities and Shareholders Equity
Accounts payable	$	47,000
Common shares		63,000
Retained earnings		141,000
Total liabilities and shareholders equity	$	251,000

Budgeted Income Statements
April		May	June
Sales	$	107,000	$	120,000	$	138,000
Cost of goods sold		64,200		72,000		82,800
Gross margin		42,800		48,000		55,200
Selling and administrative expenses		14,000		10,000		15,000
Operating income	$	28,800	$	38,000	$	40,200

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 $143,000 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 $1,500 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.)