hing Balance Sheet [LO2, LO4, L09, L010] EXERCISE 8-14 Schedules of Expected Cash Collections and Disbursements; Income Statement; Colerain Corporation is a merchandising company that is preparing a profit plan for the third quar- ter of the calendar year. The company's balance sheet as of June 30 is shown below: Colerain Corporation Balance Sheet June 30 Assets Cash. $ 80,000 126,000 Accounts receivable. Inventory... Plant and equipment, net of depreciation. 52,000 200,000 $458,000 Total assets.. Liabilities and Stockholders' Equity Accounts payable.. Common stock. Retained earnings.. Total liabilities and stockholders' equity... $ 61,100 300,000 96,900 $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. ll sales are on credit and all credit sales are collected. Each month's credit sales are collected 20% in the month of sale and 70% in the month following the sale. All of the accounts receiv- able at June 30 will be collected in July. 2 Fach 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 accounts payable at June 30 will be paid in July. Monthiy selling and administrative 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 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 sock or repurchase its own stock during the quarter ended September 30. Required: 1. Prepare a schedule of expected cash collections for July. Angust, and September. Also com- pute total cash collections for the quarter ended September 30th. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30th. b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, aAugust, and September. Also compute total cash disbursements for merchandise pur- chases for the quarter ended September 30th. 2. а.

hing Balance Sheet [LO2, LO4, L09, L010] EXERCISE 8-14 Schedules of Expected Cash Collections and Disbursements; Income Statement; Colerain Corporation is a merchandising company that is preparing a profit plan for the third quar- ter of the calendar year. The company's balance sheet as of June 30 is shown below: Colerain Corporation Balance Sheet June 30 Assets Cash. $ 80,000 126,000 Accounts receivable. Inventory... Plant and equipment, net of depreciation. 52,000 200,000 $458,000 Total assets.. Liabilities and Stockholders' Equity Accounts payable.. Common stock. Retained earnings.. Total liabilities and stockholders' equity... $ 61,100 300,000 96,900 $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. ll sales are on credit and all credit sales are collected. Each month's credit sales are collected 20% in the month of sale and 70% in the month following the sale. All of the accounts receiv- able at June 30 will be collected in July. 2 Fach 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 accounts payable at June 30 will be paid in July. Monthiy selling and administrative 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 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 sock or repurchase its own stock during the quarter ended September 30. Required: 1. Prepare a schedule of expected cash collections for July. Angust, and September. Also com- pute total cash collections for the quarter ended September 30th. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30th. b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, aAugust, and September. Also compute total cash disbursements for merchandise pur- chases for the quarter ended September 30th. 2. а.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 11PROB

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