PLEASE ANSWER QUESTIONS 5 AND 6 ONLY. Thank you.

Following is selected information relating to the operations of Pocketchange Company, a tile distributor. September 30, 2018 - Trial Balance information $ Cash... Accounts receivable. Inventory... Plant and equipment, net of Acc. Dep. Accounts payable. Capital stock. Retained earnings. 8,500 24,800 40,800 428,600 24,650 150,000 328,050 502,700 $ 502,700$ a. Actual and budgeted sales data: $ September (actual). October... November December January... 62,000 68,000 81,000 94,000 48,000 b. Gross profit is 25% of sales (or 75% Cost of Goods Sold %). c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at September 30 are a result of the September's credit sales. d. At the end of each month, inventory on hand is to be equal to 80% of the following month's sales needs, stated at cost. e. One-half of a month's inventory purchases is paid in the month of purchase; the other half is paid in the following month. The accounts payable at September 30 are a result of September purchases of inventory. f. Monthly expenses are as follows; salaries and wages, 12% of sales; rent, $2,500 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $1,300 per month (includes depreciation on new assets). 8. Equipment costing $7,000 will be purchased for cash in the October and another $4,000 in November. h. The company must maintain a minimum cash balance of $5,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month; borrowing and repayments must be made in multiples of $1,000. The annual interest rate is 12%. Interest is paid only at the time of repayment of principles; figure interest on the whole month (2/12, 3/12, and so forth). Any unpaid interest is accrued at the end of the quarter. 94000 243000 Required: Using the data above: NAME SALES 68000 81000 1. Complete the following schedule: Schedule of Expected Cash Collections Oct. Nov. Cash sales. $ 40,800 Credit sales. 24,800 Total collections. $ 65,600 Dec. Quarter Dec. Quarter Nov. 60,750 2. Complete the following: Inventory Purchases Budget Oct. Budgeted cost of goods sold. S 51,000 Add: Desired ending inventory.. 48,600 Total needs. 99,600 Less: Beginning inventory.... 40,800 Required purchases.... $ 58,800 + Oct. Sales X 75% cost ratio = $ ++ Nov. Sales X 75% cost ratio X 80% = $ Nov. Dec. $ Schedule of Expected Cash Disbursements-Purchases Oct. Sept.purchases. $ 24,650 Oct. purchases. 29,400 Nov. purchases Dec. purchases. Total disbursements for purchases.... S 54,050 Quarter 24,650 58,800 29,400 Dec. Quarter 3. Complete the following: Schedule of Expected Cash Disbursements-Operating Expenses Oct. Nov. Salaries and wages $ 8,160 Rent... 2,500 Other expenses 4,080 Total disbursements $ 14,740 Dec. Quarter 4. Complete the following cash budget: Cash Budget (Cash Receipts and Disbursements) Oct. Nov. Cash balance, beginning. $ 8,500 Add: cash collections 65,600 Total cash available... 74,100 Less: Cash disbursements. For inventory 54,050 For expenses 14,740 For equipment..... 7,000 Total cash disbursements. 75,790 Expected cash balance (overdraft). (1,690) Financing: Borrowings (at beginning). 7,000 Repayments (at end) .... Interest (at 12% per year) Total financing 7,000 Cash balance, ending... $ 5,310 5. Prepare an income statement for the quarter ended December 31. (Use the functional format in preparing your income statement, as shown in the text.) 6. Prepare a balance sheet as of December 31. ANSWER SHEET NAME Pocketchange Company Income Statement For the quarter ended December 31, 2018 $ 243,000 $ 40,800 Sales... Beginning inventory Purchases.. Goods available Ending inventory Cost of goods sold Gross profit...... Operating expenses: Salaries Rent. Depreciation Other expenses. Mot onorating incomo Other expenses. Net operating income. Less: Interest expenses. Net income. Pocketchange Company Balance Sheet December 31, 2018 Assets Cash (Part 4) Accounts receivable Inventory (Part 2) Total current assets Fixed assets - net of accumulated depreciation Total assets. Liabilities and Equity Accounts payable Notes payable Interest payable Total liabilites Stockholders' equity: Capital stock Retained earnings Total liabilities and equity.. $ 150,000