Ryan Richards, controller for Grange Retailers, has assembled the following data to assist in the preparation of a cash budget for the third quarter of the year: A. Sales:

May (actual)	$100,000
June (actual)	120,000
July (estimated)	90,000
August (estimated)	100,000
September (estimated)	135,000
October (estimated)	110,000

B. Each month, 30% of sales are for cash and 70% are on credit. The collection pattern for credit sales is 20% in the month of sale, 50% in the following month, and 30% in the second month following the sale. C. Each month, the ending inventory exactly equals 50% of the cost of next month's sales. The markup on goods is 25% of cost D. Inventory purchases are paid for in the month following the purchase. E. Recurring monthly expenses are as follows:

Salaries and wages	$10,000
Depreciation on plant and equipment	4,000
Utilities	1,000
Other	1,700

F. Property taxes of $15,000 are due and payable on July 15. G. Advertising fees of $6,000 must be paid on August 20. H. A lease on a new storage facility is scheduled to begin on September 2. Monthly payments are $5,000. I. The company has a policy to maintain a minimum cash balance of $10,000. If necessary, it will borrow to meet its short-term needs. All borrowing is done at the beginning of the month. All payments on principal and interest are made at the end of a month. The annual interest rate is 9%. The company must borrow in multiples of $1,000. J. A partially completed balance sheet as of June 30 follows. (Note: Accounts payable is for inventory purchases only.)

Cash	$?
Accounts Receivable	?
Inventory	?
Plant and equipment, net	425,000
Accounts payable		$?
Common stock		210,000
Retained earnings		2678,750
Total	$?	$?

1. Complete the balance sheet given in Item J. 2. Prepare a cash budget for each month in the third quarter and for the quarter in total (the third quarter begins on July 1). Prepare a supporting schedule of cash collections. 3. Prepare a pro forma balance sheet as of September 30. Show solution