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 $ 91,000 Accounts receivable 137,000 Inventory 63,000 Plant and equipment, net of depreciation 310,000 Total assets $ 601,000 Liabilities and shareholders' Equity Accounts payable $ 72,000 Common shares 410,000 Retained earnings 119,000 Total liabilities and shareholders' equity 5 601,000 Colerain's managers have made the following additional assumptions and estimates: 6. Estimated sales for July, August, September, and October will be $255,000, $275,000, $265,000, and $285,000, respectively. b. 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 ofthe accounts receivable at June 30 will be collected in July. c. 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 accounts payable at June 30 will be paid in July. d. Monthly selling and administrative expenses are always $76,000. Each month, $9,000 of this total amount is depreciation expense e. 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 shares or repurchase its own shares during the quarter ended September 30. Required: 1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30. Schedule of Expected Cash Collections July August September Quarter From accounts receivable $ 137,000 E.. $ 137,000 Sales on account: July 76,500 $ 178,500 255,000 August 82,500 $ 192,500 275,000 September 79,500 79,500 Total cash collections $ 213,500 $ 261,000 $ 272,000 $ 746,5002b. 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. Schedule of Cash Disbursements for Purchases July August September Total From accounts payable $ 72,000 $ 72,000 Purchase on account: July 87,125 $ 87,125 174,250 August 88,075 $ 88,075 176, 150 September 88,725: 88,725 Total cash disbursements $ 159,125 $ 175,200 $ 176,800 $ 511, 1253. Prepare an income statement for the quarter ended September 30. (Do not leave any empty spaces; input a O wherever it is required.) $ 795.000 Cost of goods sold 516,750 Gross margin 278,250 I epreciation Operating income 278,250 et income 4. Prepare a balance sheet as of September 30. Cash Accounts receivable Total assets Liabilities and Shareholders' Equity Total liabilities and shareholders' equity $ 0