Question $1$

Deacon Company is a merchandising company that is preparing a budget for the second quarter of the calendar year. The following information is available.

$\backslash$table$[[$DEACON COMPANY,$],[$Balance Sheet$],[31-$Mar,,$],[$Assets$,,52,000],[$Cash$,$$$,45,000],[$Accounts receivable,$$,39,000],[$Inventory$,$$$,102,000],[$Plant and equipment, net of depreciation,$$,238,000],[$Total assets,,$],[$Liabilities and Shareholders' Equity,$$,58,000],[$Accounts payable,$$,74,000],[$Common shares,$$,106,000],[$Retained earnings,$$,238,000],[$Total liabilities and shareholders' equity,,$]]$

$\backslash$table$[[$Budgeted Income Statements$],[,$April,May,June$],[$Sales$,98,000,113,000,139,000],[$Cost of goods sold,$58,800,67,800,83,400],[$Gross margin,$39,200,45,200,55,600],[$Selling and administrative expenses,$11,000,13,000,20,000],[$Operating income,$28,200,32,200,35,600]]$

Budgeting Assumptions:

Sixty percent of sales are cash sales and $40$ percent of sales are credit sales. Twenty percent of all credit sales are collected in the month of sale and the remaining $80$ percent are collected in the month subsequent to the sale,

Budgeted sales for July are $$143,000$ while the budgeted cost of goods sold is $60\%.$

$10\%$ 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.

Each month's ending merchandise inventory should equal $$11,000$ plus $50\%$ of the next month's cost goods sold.

Depreciation expense is $$1,000$ per month. All other selling and administrative expenses are paid in full in the month the expense is incurred.

A$.$ Calculate the expected cash collections for April, May, and June.

B$.$ Calculate the budgeted merchandise purchases for April, May, and June.

C$.$ Calculate the expected cash disbursements for merchandise purchases for April, May, and June.

D$.$ 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.$)$