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Deacon Company is a merchandising company that is preparing a budget for the three-month period ended June 30th

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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 $ 65,200 Accounts receivable   38,800 Inventory   43,300 Buildings and equipment, net of depreciation   125,000 Total assets $ 272,300 Liabilities and Stockholders' Equity Accounts payable $ 66,200 Common stock   70,000 Retained earnings   136,100 Total liabilities and stockholders' equity $ 272,300

Budgeted Income Statements             April   May   June Sales $ 111,000   $ 121,000   $ 141,000 Cost of goods sold   66,600     72,600     84,600   Gross margin   44,400     48,400     56,400 Selling and administrative expenses   23,300     24,800     27,800 Net operating income $ 21,100   $ 23,600   $ 28,600

Budgeting Assumptions:

1. 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.
2. Budgeted sales for July are $151,000.
3. 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.
4. Each month's ending merchandise inventory should equal $10,000 plus 50% of the next month's cost of goods sold.
5. Depreciation expense is $1,600 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. make 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.)