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.

Using the above information and the information from your previously calculated schedules, prepare the income statement for the quarter ending September 30. Ignore taxes.

Sales
Cost of Goods Sold
Gross Margin
Less: Selling and Administrative Costs
Net Income