Problem 8-27 (Algo) Cash Collections; Cash Disbursements; Budgeted Balance Sheet (L08-2, LO8-3, LO8-4, LO8-10] 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 $ 62,000 43,600 46, eee 107, eee $ 258,600 $ 63,600 7e, eee 125,000 258,600 $ Budgeted Income Statements April Sales $120,000 cost of goods sold 72, eee Gross margin 48, eee selling and administrative expenses 24,900 Net operating income $ 23,100 May $130, eee 78, eee 52,000 26,400 $ 25,600 June $150, eee 9e, eee 60, eee 29,480 $ 30,600 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 $160,000 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 $1,900 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 30th. (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 30th balance sheet.)