*CAN YOU ANSWER PART 4* Deacon Company is a merchandising company that is preparing a budget for the three-month period ended June 30. The following information is available Deacon Company Balance Sheet March 31 Assets Cash $ 68,200 Accounts receivable 42,000 Inventory 63,400 Buildings and equipment, net of depreciation 122,000 Total assets $ 295,600 Liabilities and Stockholders’ Equity Accounts payable $ 96,400 Common stock 70,000 Retained earnings 129,200 Total liabilities and stockholders’ equity $ 295,600 Budgeted Income Statements April May June Sales $ 178,000 $ 188,000 $ 208,000 Cost of goods sold 106,800 112,800 124,800 Gross margin 71,200 75,200 83,200 Selling and administrative expenses 19,000 20,500 23,500 Net operating income $ 52,200 $ 54,700 $ 59,700 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 $218,000. 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 month’s ending merchandise inventory should equal $10,000 plus 50% of the next month’s cost of goods sold. Depreciation expense is $1,800 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 30. (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 30 balance sheet.)
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
*CAN YOU ANSWER PART 4*
Deacon Company is a merchandising company that is preparing a budget for the three-month period ended June 30. The following information is available
| Deacon Company March 31 |
||
| Assets | ||
| Cash | $ | 68,200 |
| 42,000 | ||
| Inventory | 63,400 | |
| Buildings and equipment, net of depreciation | 122,000 | |
| Total assets | $ | 295,600 |
| Liabilities and |
||
| Accounts payable | $ | 96,400 |
| Common stock | 70,000 | |
| 129,200 | ||
| Total liabilities and stockholders’ equity | $ | 295,600 |
| April | May | June | |||||||
| Sales | $ | 178,000 | $ | 188,000 | $ | 208,000 | |||
| Cost of goods sold | 106,800 | 112,800 | 124,800 | ||||||
| Gross margin | 71,200 | 75,200 | 83,200 | ||||||
| Selling and administrative expenses | 19,000 | 20,500 | 23,500 | ||||||
| Net operating income | $ | 52,200 | $ | 54,700 | $ | 59,700 | |||
Budgeting Assumptions:
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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.
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Budgeted sales for July are $218,000.
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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.
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Each month’s ending merchandise inventory should equal $10,000 plus 50% of the next month’s cost of goods sold.
-
Depreciation expense is $1,800 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 30. (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 30 balance sheet.)
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