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 $ 55,000 Accounts receivable 35,000 Inventory 40,000 Buildings and equipment, net of depreciation 100,000 Total assets $231,000 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings $51,300 70,000 Total liabilities and stockholders' equity. 109,700 $231,000 Budgeted Income Statements April Sales $ 100,000. May $110,000 June $130,000 Cost of goods sold 60,000 66,000 Gross margin 48,000 44,000 Selling and administrative expenses 15,000 16,500 78,000 52,000 19,500 Net operating income $ 25,000 $27,500 $ 32,500 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.