Highlands Companys balance sheet shows the following:

Highlands Company

Balance Sheet

August 31

Assets

Cash.... $ 7,000

Accounts receivable ... 54,000

Inventory ...... 30,000

Buildings and equipment, net of depreciation .... 207,000

Total assets ... $298,000

Liabilities and Stockholders Equity

Accounts payable ..... $ 61,000

Note payable...... 14,500

Common stock.......... 180,000

Retained earnings ......... 42,500

Total liabilities and stockholders equity.............. $298,000

The company is preparing a budget for September and its accounting records show the following:

a. The Septembers sales budget is $200,000. Thirty percent of the budgeted sales are expected to be cash sales. Seventy percent of the sales are expected to be credit sales. Fifty percent of the credit sales are expected to be collected during September. Another fifty percent are expected to be collected during October. All of the August accounting receivable are expected to be collected in September.

b. During September, purchases of inventory will be $120,000 which will be on credit. Of these purchases, $48,000 will be paid for in September and the remainder will be paid in October. The company will pay all of its August accounts payable to suppliers in September.

c. The inventory balance at the end of September is expected to be $40,000.

d. Selling, general, and administrative expenses are expected to be $72,000, which will be paid in cash in September. In addition to $72,000, depreciation expense is expected to be $2,000 in September.

e. In September, the company will pay all of its August note payable balance. It will also pay $300 interest, which relates to September.

f. The company will buy new equipment at $6,500 with cash in September.

g. In September, $20,000 will be borrowed from a bank and the company will sign a note payable for it. The company will need to pay its new note payable a year later.

Required: For September, prepare the followings.

1. Budgeted income statement

2. Schedule of cash receipts for sales

3. Schedule of cash payments for inventory purchases

4. Cash budget