HW Q3 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 $ 71,800 Accounts receivable 42,800 Inventory 46,000 Buildings and equipment, net of depreciation 149,000 Total assets $ 309,600 Liabilities and Stockholders Equity Accounts payable $ 125,100 Common stock 70,000 Retained earnings 114,500 Total liabilities and stockholders equity $ 309,600 Budgeted Income Statements April May June Sales $ 120,000 $ 130,000 $ 150,000 Cost of goods sold 72,000 78,000 90,000 Gross margin 48,000 52,000 60,000 Selling and administrative expenses 18,100 19,600 22,600 Net operating income $ 29,900 $ 32,400 $ 37,400 Budgeting Assumptions 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 Budgeted sales for July are $160,000 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 Each months ending merchandise inventory should equal $10,000 plus 50 of the next months cost of goods sold Depreciation expense is $1,850 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 )

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 13, 2024

HW. Q3 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	$	71,800
Accounts receivable		42,800
Inventory		46,000
Buildings and equipment, net of depreciation		149,000
Total assets	$	309,600
Liabilities and Stockholders Equity
Accounts payable	$	125,100
Common stock		70,000
Retained earnings		114,500
Total liabilities and stockholders equity	$	309,600

Budgeted Income Statements
	April		May		June
Sales	$	120,000	$	130,000	$	150,000
Cost of goods sold		72,000		78,000		90,000
Gross margin		48,000		52,000		60,000
Selling and administrative expenses		18,100		19,600		22,600
Net operating income	$	29,900	$	32,400	$	37,400

Budgeting Assumptions:

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.
Budgeted sales for July are $160,000.
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.
Each months ending merchandise inventory should equal $10,000 plus 50% of the next months cost of goods sold.
Depreciation expense is $1,850 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.)