Deacon Company is a merchandising company that is preparing a budget for the second quarter of the calendar year. The following information is available. DEACON COMPANY Balance Sheet March 31 Assets Cash $ 59,000 Accounts receivable 37,000 Inventory 45,000 Plant and equipment, net of depreciation 95,000 Total assets $ 236,000 Liabilities and Shareholders Equity Accounts payable $ 41,000 Common shares 64,000 Retained earnings 131,000 Total liabilities and shareholders equity $ 236,000 Budgeted Income Statements April May June Sales $ 102,000 $ 103,000 $ 121,000 Cost of goods sold 61,200 61,800 72,600 Gross margin 40,800 41,200 48,400 Selling and administrative expenses 20,000 19,000 17,000 Operating income $ 20,800 $ 22,200 $ 31,400 Budgeting Assumptions: Sixty percent of sales are cash sales and 40 percent of sales are credit sales. Twenty percent of all credit sales are collected in the month of sale and the remaining 80 percent are collected in the month subsequent to the sale. Budgeted sales for July are $136,000 while the budgeted cost of goods sold is 60%. 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. Each months ending merchandise inventory should equal $12,000 plus 50% of the next months cost of goods sold. Depreciation expense is $1,000 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.)