Problem $8-27$ Cash Collections; Cash Disbursements; Budgeted Balance Sheet $[$LO$8-2,$ LO$8-3,$ LO$8-4,$ LO$8-10]$

Deacon Company is a merchandising company that is preparing a budget for the three$-$month period ended June $30.$ The following information is available

Deacon Company

Balance Sheet

March $31$

Assets

Cash $ $60,000$

Accounts receivable $30,000$

Inventory $43,900$

Buildings and equipment, net of depreciation $131,000$

Total assets $ $264,900$

Liabilities and Stockholders$$ Equity

Accounts payable $ $72,000$

Common stock $70,000$

Retained earnings $122,900$

Total liabilities and stockholders$$ equity $ $264,900$

Budgeted Income Statements

April May June

Sales $ $113,000$ $ $123,000$ $ $143,000$

Cost of goods sold $67,80073,80085,800$

Gross margin $45,20049,20057,200$

Selling and administrative expenses $17,00018,50021,500$

Net operating income $ $28,200$ $ $30,700$ $ $35,700$

Budgeting Assumptions:

$60\%$ 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.

Budgeted sales for July are $$153,000.$

$10\%$ 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.

Each month$$s ending merchandise inventory should equal $$10,000$ plus $50\%$ of the next month$$s cost of goods sold.

Depreciation expense is $$1,050$ 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.$)$