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 59,200 31,600 47,500 119,000 $ 257,300 Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders Equity Accounts payable 76,400 70,000 110,900 Common stock Retained earnings $ 257,300 Total liabilities and stockholders' equity Budgeted Income Statements April $125,000 75,000 ay $135,000 81,000 June $155,000 93,000 62,000 22,000 Sales Cost of goods sold Gross margin Selling and administrative expenses 50,000 17,500 54,000 19,000 32,500 35,000 $40,000 Net operating income 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 $165,000. 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 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 $165,000. 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 $1,150 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.) 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. April May June Quarter Total cash collections Required 1 Required 2 Required 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 0 Total assets Liabilities and Stockholders' Equity Total liabilities and stockholders' equity
