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 ats Skipped Deacon Company Balance Sheet March 31 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total seta Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equicy 우 62, 600 37,200 11,500 174,000 $ 315, 300 eBook $ 113, 100 70,000 132, 200 S $15,300 Print eferences Budgeted Income Statemente April Sales $105,000 Cost of goods sold 63,000 Gross margin 42,000 Selling and administrative expenses 15,400 Net operating income $ 26, 600 May $115,000 69,000 46,000 16,900 $ 29,100 June $135,000 81,000 54,000 19,900 S 34,100 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 $145,000 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 $1,500 per month. All other selling and administrative expenses are paid in full in the month the expense is incurred

Answer 1

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Part 1

Schedule of Expected Cash Collections
	April	May	June	Quarter
Cash sales	63,000	69,000	81,000	213,000
From Account Receivable	37,200			37,200
From Sales of April	8,400	33,600		42,000
From Sales of May		9,200	36,800	46,000
From Sales of June			10,800	10,800
Total cash collections	108,600	111,800	128,600	349,000

Part 2

Merchandise Purchases Budget
	April	May	June	Quarter
Budgeted cost of goods sold	63,000	69,000	81,000	213,000
Add: Desired ending merchandise inventory	44,500	50,500	53,500	53,500
Total needs	107,500	119,500	134,500	266,500
Less: Beginning merchandise inventory	41,500	44,500	50,500	41,500
Required purchases in Value	66,000	75,000	84,000	225,000

Part 3

Schedule of Cash Disbursements for Purchases
	April	May	June	Quarter
From Account Payable	113,100			113,100
From Purchase of April	6,600	59,400		66,000
From Purchase of May		7,500	67,500	75,000
From Purchase of June			8,400	8,400
Total cash disbursements for Purchases	119,700	66,900	75,900	262,500

Part 4

Company Name
Balance Sheet
June 30
Assets
Cash	101,400
Accounts receivable	43,200
Inventory	53,500
Plant and equipment (174000-(1500*3 months))	169,500
Total assets	367,600
Liabilities and Stockholders' Equity
Accounts payable	75,600
Common stock	70,000
Retained earnings (132200+26600+29100+34100)	222,000
Total liabilities and stockholders' equity	367,600

Company Name
cash budget
For the Quarter Ended June 30
Beginning balance of cash	62,600
Cash received from sales	349,000
Total cash available for made payment	411,600
Less: payment made to account payable	262,500
Less: selling and administrative expense paid (exclude depreciation )	47,700
Ending balance of cash	101,400