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 $ 56,000 Accounts receivable 41,000 Inventory 38,000 Plant and equipment, net of depreciation 100,000 Total assets $ 235,000 Liabilities and Shareholders Equity Accounts payable $ 44,000 Common shares 76,000 Retained earnings 115,000 Total liabilities and shareholders equity $ 235,000 Budgeted Income Statements April May June Sales $ 94,000 $ 101,000 $ 136,000 Cost of goods sold 56,400 60,600 81,600 Gross margin 37,600 40,400 54,400 Selling and administrative expenses 17,000 16,000 18,000 Operating income $ 20,600 $ 24,400 $ 36,400 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 $147,000 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 $14,000 plus 50 of the next months cost of goods sold Depreciation expense is $1,100 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	$	56,000
Accounts receivable		41,000
Inventory		38,000
Plant and equipment, net of depreciation		100,000
Total assets	$	235,000
Liabilities and Shareholders Equity
Accounts payable	$	44,000
Common shares		76,000
Retained earnings		115,000
Total liabilities and shareholders equity	$	235,000

Budgeted Income Statements
Budgeted Income Statements	April		May		June
Sales	$	94,000	$	101,000	$	136,000
Cost of goods sold		56,400		60,600		81,600
Gross margin		37,600		40,400		54,400
Selling and administrative expenses		17,000		16,000		18,000
Operating income	$	20,600	$	24,400	$	36,400

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 $147,000 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 $14,000 plus 50% of the next months cost of goods sold.
Depreciation expense is $1,100 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.)