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	$ 56,000
Accounts receivable	36,400
Inventory	62,800
Buildings and equipment, net of depreciation	199,000
Total assets	$ 354,200
Liabilities and Stockholders Equity
Accounts payable	$ 172,100
Common stock	70,000
Retained earnings	112,100
Total liabilities and stockholders equity	$ 354,200

Budgeted Income Statements	April	May	June
Sales	$ 176,000	$ 186,000	$ 206,000
Cost of goods sold	105,600	111,600	123,600
Gross margin	70,400	74,400	82,400
Selling and administrative expenses	19,800	21,300	24,300
Net operating income	$ 50,600	$ 53,100	$ 58,100

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 $216,000.

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 months ending merchandise inventory should equal $10,000 plus 50% of the next months cost of goods sold.

Depreciation expense is $1,450 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 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.)

FORMAT ANSWERS FOR ENTRY INTO BELOW TABS

Calculate the expected cash collections for April, May, and June. Calculate the budgeted merchandise purchases for April, May, and June. Iculate the expected cash disbursements for merchandise purchases for April, May, and June. Prepare a 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.)