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QUESTION 5 - Cash Budget (15 marks) Colerain Corporation is a merchandising company that is preparing a budget for the third quarter of the calendar year. The company's balance sheet as of June 30 is shown below COLERAIN CORPORATION Balance Sheet June 30 Assets Cash Accounts receivable Inventory Plant and equipment, not of depreciation $ 91,000 137.000 63,000 310,000 Total assets 5601,000 Llabilities and Shareholders' Equity Accounts payable Common shares Retained earnings $ 72,000 410,000 119,000 Total liabilities and shareholders equity $ 601,000 Colerain's managers have made the following additional assumptions and estimates a. Estimated sales for July August, September and October will be $255,000 $275.000 265,000, and $285,000, respectively All sales are on credit and all credit sales are collected Each month's 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 Each month's ending inventory must equal 40% of the cost of next month's 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 a Montroy selling and administrative expenses are always 576,000. Each month. 59.000 of this fotini armount is depreciation expense and the remaining $67.000 relates to expenses that are paid in the month they are incurred e. The company does not plan to borrow money or pay or declare dividende during the quarter ended September 30 The company does not plan to issue any common shares or repurchase its own shares during the quarter ended September 30, Prepare a Cash Budget for the Jul. to Sep. Quarter, commenting on whether the Corporation's Current Ratio will improve or worsen over the period, with support