Deacon Company is a merchandising company that is preparing a budget for the three-month period ended June 30th. The following information is available 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 S 61,400 32,400 58,300 148,000 $ 300,100 $ 105,100 70,000 125,000 $ 300,100 Budgeted Income Statements April June Sales Cost of goods sold Gross margin Selling and administrative expenses 18,300 Net operating income $161,000 $171,000 $191,000 102,600 114,600 76,400 22,800 S 46,100 48,600 53,600 96,609 64,400 68,400 19,800 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 during April, May, and June to determine the cash balance in your June 30th balance sheet.) Required 1 Required 2Required 3 Required 4 Calculate the expected cash collections for April, May, and June. April May Quarter June Total cash collections Required 1 Required 2 Required 3 Required 4 Calculate the budgeted merchandise purchases for April, May, and June. Total June May April Budgeted merchandise purchases Required 1 Required 2Reqired 3 Required 4 Calculate the expected cash disbursements for merchandise purchases for April, May, and June April May June Quarter Budgeted cash disbursements for merchandise purchases Required 1 Required 2Required 3 Required 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 June 30 Assets Total assets Liabilities and Stockholders' Equity Total liabilities and stockholders' equity
