Question

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 $ 68,800 34,000 64,600 122,000 $ 289,400 $ 96,500 70,000 122,900 $ 289,400 Budgeted Income Statements April Sales $182,000 Cost of goods sold 109, 200 Gross margin 72,800 Selling and administrative expenses_18,800 Net operating income $ 54,000 May $192,000 115,200 76,800 20, 300 $ 56,500 June $212,000 127,200 84,800 23,300 $ 61,500 Budgeting Assumptions:
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Answer 1

Solutions:

Schedule of expected cash collection - Deacon company
Particulars	April	May	June	Quarter
Accounts Receivables from March	$34,000.00			$34,000.00
Cash sales (Sales*60%)	$1,09,200.00	$1,15,200.00	$1,27,200.00	$3,51,600.00
Cash received for April credit Sale	$14,560.00	$58,240.00		$72,800.00
Cash received for May credit Sale		$15,360.00	$61,440.00	$76,800.00
Cash received for June credit Sale			$16,960.00	$16,960.00
Budgeted Cash Collection	$1,57,760.00	$1,88,800.00	$2,05,600.00	$5,52,160.00
Merchandise Purchase Budget - Deacon Company
Particulars	April	May	June	Total
Cost of Sales (60% of Sales)	$1,09,200.00	$1,15,200.00	$1,27,200.00	$3,51,600.00
Add: Desired ending inventory ($10000+50% of COGS of next month)	$67,600.00	$73,600.00	$76,600.00	$76,600.00
Less: Opening Inventory	$64,600.00	$67,600.00	$73,600.00	$64,600.00
Budgeted purchases (in dollars)	$1,12,200.00	$1,21,200.00	$1,30,200.00	$3,63,600.00
Schedule of expected cash disbursement for merchandise purchases - Deacon Company
Particulars	April	May	June	Quarter
Payables from March	$96,500.00			$96,500.00
July Purchases	$11,220.00	$1,00,980.00		$1,12,200.00
August Purchases		$12,120.00	$1,09,080.00	$1,21,200.00
September Purchases			$13,020.00	$13,020.00
Total payments in month	$1,07,720.00	$1,13,100.00	$1,22,100.00	$3,42,920.00

Balance Sheet- Deacon Company
31-June
Particulars	Amount
Assets:
Cash ($68800 + $552160 - $342920 - 18800-20300-23300+1300*3)	$2,19,540.00
Accounts receivables ($212,000*40%*80%)	$67,840.00
Inventory	$76,600.00
Buildings and equipment net of depreciation ($122,000 - $1300*3)	$1,18,100.00
Total Assets	$4,82,080.00
Liabilities and stockholder's Equity:
Accounts payable ($130200*90%)	$1,17,180.00
Common Stock	$70,000.00
Retained Earnings (122900+54000+56500+61500)	$2,94,900.00
Total liabilities and stockholders equity	$4,82,080.00