7.14 13 points Problem 8-27 (Algo) Cash Collections; Cash Disbursements; Budgeted Balance Sheet [LO8-2, LO8-3, LO8-4, LO8-10] Deacon Company is a merchandising company that is preparing a budget for the three-month period ended June 30th. The following Information is available eBook Assets Cash Accounts receivable Print Inventory Deacon Company Balance Sheet March 31 Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity Sales Budgeted Income Statements Cost of goods sold Gross margin Selling and administrative expenses Net operating income Budgeting Assumptions: April $ 178,000 106,800 71,200 19,000 $ 68,200 42,000 63,400 122,000 $ 295,600 $ 96,400 70,000 129,200 $ 295,600 May $ 188,000 112,800 75,200 20,500 June $ 208,000 124,800 83,200 23,500 $ 52,200 $ 54,700 $ 59,700 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 $218,000. 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 $1,800 per month. All other selling and administrative expenses are paid in full in the month the expense is Incurred.