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Colerain Corp. is a merchandising company that is preparing a profit plan for the third quarter of the calendar year. The companys balance sheet as

Colerain Corp. is a merchandising company that is preparing a profit plan for the third quarter of the calendar year. The companys balance sheet as of June 30 is shown below:

Colerain Corp., Balance Sheet as of June 30

Assets

Cash

$80,000

Accounts Receivable

126,000

Inventory

52,000

Plant and Equipment, net of depreciation

200,000

Total Assets

$458,000

Liabilities and Stockholders Equity

Accounts Payable

$61,100

Common Stock

300,000

Retained Earnings

96,900

Total liabilities and stockholders equity

$458,000

Colerains managers have made the following additional assumptions and estimates:

  • Estimated sales for July, August, September, and October will be $200,000, $220,000, $210,000, and $230,000 respectively.
  • All sales are on credit and all credit sales are collected. Each months credit sales are collected 30% in the month of sale and 70% in the following month. All of the accounts receivable at June 30 will be collected in July.
  • Each months ending inventory must be equal to 40% of the cost of the next months sales. The cost of goods sold is 65% of sales. The company pays for 50% of its merchandise purchases in the month of purchase and the remaining 50% in the following month. All of the accounts payable at June 30 will be paid in July.
  • Monthly selling and administrative expenses are $65,000. Each month $5,000 of this total amount is depreciation expense and the remaining $60,000 relates to expenses that are paid in the month they are incurred.
  • The company will not borrow money, issue stock, or pay dividends during the third quarter.

To answer the following questions, prepare the firm's balance sheet as of September 30. Use the schedules and the income statement to assist in the preparation.

Assets
Cash
Accounts Receivable
Inventory
Plant and Equipment (net)
Total Assets
Liabilities and Equity
Accounts Payable
Common Stock
Retained Earnings
Total Liabilities and Equity

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