Question

Deacon Company is a merchandising company that is preparing a budget for the three-month period ended June 30th. The followin information is available Book Point 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 50,000 30,000 43,900 131,000 264,900 Ferences $ $ 72,000 70,000 122.900 264,900 5 Budgeted Income Statements April Sales $113,000 Cost of goods sold 62.00 Gross margin 45,200 Selling and administrative expenses 17,000 Net operating income $ 28,200 May $123,000 23,00 49,200 18,500 $ 30,700 June $143,000 35,800 57,200 21,500 $ 35,700

Answer 1

Required Budgets are as prepared below:

Deacon Company
Sales Budget
For the quarter ended June 30
	Month
Particulars	April	May	June	Total
Budgeted sales	113,000	123,000	143,000	379,000
Deacon Company
Schedule of expected Cash collections
For the quarter ended June 30
	Month
Particulars	April	May	June	Total
Beginning Accounts Receivable	30,000			30,000
Cash sales	67,800	73,800	85,800	227,400
Credit Sales				0
Collected in same month	9,040	9,840	11,440	30,320
Collected in following month		36,160	39,360	75,520
Total collections	106,840	119,800	136,600	363,240
Account receivable for June Sale			45,760

Deacon Company
Merchandise Purchase Budget
For the quarter ended June 30
	Month
Particulars	April	May	June	Total
Cost of goods sold	67,800	73,800	85,800	227,400
Add: Desired Ending merchandise inventory	46,900	52,900	55,900	55,900
Total needs	114,700	126,700	141,700	283,300
Less: beginning merchandise inventory	43,900	46,900	52,900	43,900
Required dollar purchases	70,800	79,800	88,800	239,400
Deacon Company
Schedule of expected Cash payments
For the quarter ended June 30
	Month
Particulars	April	May	June	Total
Beginning Accounts Payable (a)	$72,000			$72,000
April Purchases (b)	$7,080	$63,720		$70,800
May Purchases (c )		$7,980	$71,820	$79,800
June Purchases (d)			$8,880	$8,880
Total payments (a+b+c+d)	$79,080	$71,700	$80,700	$231,480
Deacon Company
Selling and administrative exp
For the quarter ended June 30
	Month
Particulars	April	May	June	Total
Selling and administrative expenses	17,000	18,500	21,500	57,000
Less: Depreciation	1,050	1,050	1,050	3,150
Selling and administrative expenses paid	15,950	17,450	20,450	53,850
Deacon Company
Cash Budget
For the quarter ended June 30
	Month
Particulars	April	May	June	Total
Beginning Cash balance	60,000	71,810	102,460	60,000
Add: Collection from customers	$106,840	$119,800	$136,600	363,240
cash available for use	$166,840	$191,610	$239,060	$423,240
Less: cash Disbursements
Merchandise purchase	$79,080	$71,700	$80,700	231,480
Selling and administrative exp	15,950	17,450	20,450	53,850
Total disbursement	95,030	89,150	101,150	285,330
Cash surplus/Deficit	71,810	102,460	137,910	137,910
Budgeted ending cash balance	71,810	102,460	137,910	137,910

Deacon Company
Budgeted Income Statement
For the three month ended June 30
Particulars	Amount ($)	Amount ($)
Sales		379,000
Less: Cost of goods sold (379,000*.6)		227,400
Gross margin		151,600
Less: Selling and administrative exp	53,850
Depreciation	3,150
Net Income		94,600

Deacon Company
Budgeted balance Sheet
Jun-30
Assets
Cash	137,910
Accounts Receivable	45,760
Inventory	55,900
Buildings and equipment Net	127,850
Total assets	367,420
Liabilities and Stockholders' Equity
Accounts Payable purchases	79,920
Common Stock	70,000
Retained earnings (122,900+94,600)	217,500
Total liabilities and stockholders' equity	367,420