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 Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $ 58,200 34,800 68,500 118,000 $279,500 $ 95,000 70,000 114,500 $ 279,500 Budgeted Income Statements April Sales $ 195,000 Cost of goods sold 117,000 Gross margin Selling and administrative expenses, 78,000. 18,600 May $205,000 123,000 82,000 June $225,000 135,000 90,000 20,100 23,100 Net operating income $ 59,400 $ 61,900 $ 66,900 Budgeting Assumptions: 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 $235,000. 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.