Exercise 9-14 Schedules of Expected Cash Collections and Disbursements; Income Statement; Balance Sheet [LO9-2, LO9-4, LO9-9, LO9-10]

Colerain Corporation 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 Corporation Balance Sheet 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:

1.	Estimated sales for July, August, September, and October will be $200,000, $220,000, $210,000, and $230,000, respectively.
2.	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 month following the sale. All of the accounts receivable at June 30 will be collected in July.
3.	Each months ending inventory must equal 40% of the cost of 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 the purchase and the remaining 50% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
4.	Monthly selling and administrative expenses are always $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.
5.	The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.

Required:

1.	Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30th. (Do not round intermediate calculations.)

2a.	Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30th. (Do not round intermediate calculations.)

2b.	Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30th. (Do not round intermediate calculations.)

3.	Prepare an income statement for the quarter ended September 30th. (Do not round intermediate calculations.)

4.	Prepare a balance sheet as of September 30th. (Do not round intermediate calculations.)