In Chapter 9, Question 14 asks you to prepare an income statement for the quarter ended September 30 using the absorption format shown and a balance sheet as of September 30. Would you please help?

The absorption format included:

Budgeted income statement for the year ended December 31, 2014

Schedule

Sales 1 2,000,000

Cost of Goods Sold 1, 6 1,300,000

Gross Margin 700,000

Selling and Administrative Expense 7 576,000

Net Operating Income 124,000

Interest Expense 8 21,900

Net Income 102,100

Colerain Corporation Balance Sheet - June 30 Assets: Cash 80,000 Accounts Receivable 126,000 Inventory 52,000 Plant and equipment, net of depreciation 200,000 Total Assets: 458,000 Liabilities and Stockholders' Equity Accounts Payable 61,100 Common Stock 300,000 Retained Earnings 96,900 Total Liabilities and stockholders equity 458,000

additional assumptions and estimates included in the problem:

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 months 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

monthly 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

each months ending inventory must equal 40% of the cost of next months 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.

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.