Reference no: EM132510560

Colerain Corporation is preparing a profit plan 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 80,000

Accounts Receivable 126,000

Inventory 52,000

Plant and Equipment (net) 200,000

Total assets 458,000

Liabilities and Equity

Accounts Payable 61,100

Common Stock 300,000

Retained Earnings 96,900

Total Liab and Equity 458,000

Colerain's managers have made the following additional assumptions and estimates:

• Estimated sales for July, August, September and October will be $200,000, 220,000, 210,000 and 230,000, 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 following month. All of the current accounts receivable at June 30 will be collected in July
• Each month's ending inventory must equal 40% of the cost of the 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 purchase and the remaining 50% in the month following the purchase. All of the accounts payable in June will be paid in July
• Monthly selling and administration expenses are always $65,000. Each month $5,000 of this total amount is depreciation expense and the remaining $60,000 relates to expenses that are paid in the month incurred. 
• The company does not plan to borrow money or pay or declare dividends during the quarter ending September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ending September 30.

Required:

Question 1: Prepare a schedule of expected cash collections for July, August and September. Also compute total cash collections for the quarter ending September 30th

Question 2: Prepare a purchases budget for July, August and September. Also compute total  purchases for the quarter ending September 30th

Question 3: Prepare a schedule of expected cash disbursements for the purchases for July, August, and September. Also compute total cash disbursements for purchases for the quarter ending September 30th.