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 $ 58,200 Accounts receivable 34,800 Inventory 68,500 Buildings and equipment, net of 118,000 depreciation Total assets $ 279,500 Liabilities and Stockholders' Equity Accounts payable $ 95,000 Common stock 70,000 Retained earnings 114,500 Total liabilities and stockholders' equity $ 279,500 May Budgeted Income Statements April Sales $195,000 Cost of goods sold 117,000 Gross margin 78,000 Selling and administrative expenses_18,600 Net operating income $ 59,400 $205,000 123,000 82,000 20,100 $ 61,900 June $225,000 135,000 90,000 23,100 $ 66,900 Budgeted Income Statements April Sales $195,000 Cost of goods sold 117,000 Gross margin 78,000 Selling and administrative expenses 18,600 Net operating income $ 59,400 May $205,000 123,000 82,000 20,100 $ 61,900 June $225,000 135,000 90,000 23,100 $ 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. d. Each month's ending merchandise inventory should equal $10,000 plus 50% of the next month's cost of goods sold. e. Depreciation expense is $1,350 per month. All other selling and administrative expenses are paid in full in the month the expense is incurred. 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 $ 58,200 Accounts receivable 34,800 Inventory 68,500 Buildings and equipment, net of 118,000 depreciation Total assets $ 279,500 Liabilities and Stockholders' Equity Accounts payable $ 95,000 Common stock 70,000 Retained earnings 114,500 Total liabilities and stockholders' equity $ 279,500 May Budgeted Income Statements April Sales $195,000 Cost of goods sold 117,000 Gross margin 78,000 Selling and administrative expenses_18,600 Net operating income $ 59,400 $205,000 123,000 82,000 20,100 $ 61,900 June $225,000 135,000 90,000 23,100 $ 66,900 Budgeted Income Statements April Sales $195,000 Cost of goods sold 117,000 Gross margin 78,000 Selling and administrative expenses 18,600 Net operating income $ 59,400 May $205,000 123,000 82,000 20,100 $ 61,900 June $225,000 135,000 90,000 23,100 $ 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. d. Each month's ending merchandise inventory should equal $10,000 plus 50% of the next month's cost of goods sold. e. Depreciation expense is $1,350 per month. All other selling and administrative expenses are paid in full in the month the expense is incurred