colerain corporation is a merchandising company that is preparing a profit plan for 384275 | Homework Solutions

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 $ 94,000 Accounts receivable 154,000 Inventory 54,600 Plant and equipment, net of depreciation 340,000 Total assets $ 642,600 Liabilities and Stockholders Equity Accounts payable $ 73,500 Common stock 440,000 Retained earnings 129,100 Total liabilities and stockholders equity $ 642,600 Colerains managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $260,000, $280,000, $270,000, and $290,000, respectively. 2. All sales are on credit and all credit sales are collected. Each months credit sales are collected 35% in the month of sale and 65% 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 35% of the cost of next months sales. The cost of goods sold is 60% 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 $86,000. Each month $7,000 of this total amount is depreciation expense and the remaining $79,000 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. 2a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30th. (Input all amounts as positive values. Do not round intermediate calculations.) Merchandise Purchases Budget July August September Total Budgeted cost of goods sold $ $ $ $ Total needs Required purchases $ $ $ $ 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. Leave no cells blank be certain to enter “0” wherever required.) Schedule of Expected Cash Disbursements”Merchandise Purchases July August September Total From accounts payable $ $ $ $ For July purchases For August purchases For September purchases Total cash disbursements $ $ $ $ 3. Prepare an income statement for the quarter ended September 30th. (Input all amounts as positive values except losses which should be indicated by a minus sign. Do not round intermediate calculations. Leave no cells blank be certain to enter “0” wherever required.) Colerain Corporation Income Statement For the Quarter Ended September 30 $ $ 4. Prepare a balance sheet as of September 30th. (Be sure to list the assets and liabilities in order of their liquidity. Do not round intermediate calculations.) Colerain Corporation Balance Sheet September 30 Assets $ Total assets $ Liabilities and Stockholders’ Equity $ Total liabilities and stockholders’ equity $