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 $ 68,800 34,000 64,600 122,000 $ 289,400 $ 96,500 70,000 122,900 $ 289,400 Budgeted Income Statements Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income April $182,000 Hay $192,000 June $212,000 109,200 115,200 127,200 72,500 76,800 54,500 18, see 20,300 23,300 $ 54,000 $ 56,500 $ 61,500 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 $222.000 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 shoud equal $10.000 plus 50% of the next month's cost of goods sold. e. Depreciation expense is $1,300 per month, All other selling and administrative expenses are paid in full in the month the expense is Incurred.