Colerain Corporation is a merchandising company that is preparing a budget 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	$ 85,000
Accounts receivable	131,000
Inventory	57,000
Plant and equipment, net of depreciation	250,000
Total assets	$ 523,000
Liabilities and Shareholders Equity
Accounts payable	$ 66,000
Common shares	350,000
Retained earnings	107,000
Total liabilities and shareholders equity	$ 523,000

Colerains managers have made the following additional assumptions and estimates:

1. Estimated sales for July, August, September, and October will be $225,000, $245,000, $235,000, and $255,000, respectively.
2. All sales are on credit and all credit sales are collected. Each months credit sales are collected 25% in the month of sale and 75% 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 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.
4. Monthly selling and administrative expenses are always $70,000. Each month, $9,000 of this total amount is depreciation expense and the remaining $61,000 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 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. Quarter Schedule of Expected Cash Collections July August September From accounts receivable $ 131,000 Sales on account: $ 131,000 July 56,250 $ 168,750 August 61,250 $ 183,750 225,000 245,000 58,750 September 58,750 Total cash collections 187,250 $ 230,000 $ 242,500 $ 659,750 2a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30. Merchandise purchases budget July August September Quarter Budgeted cost of goods sold $ 168,750 $ 183,750 $ 176,250 $ 528,750 Add: desired ending inventory Total needs 168,750 183,750 176,250 528,750 Less: beginning inventory Required purchases 168,750 $ 183,750 $ 176,250 $ 528,750 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. Schedule of Cash Disbursements for Purchases July August September From accounts payable $ 66,000 Total $ 66,000 Purchase on account: July 0 0 August September 0 Total cash disbursements $ 66,000 $ 0 $ 0 $ 66,000 3. Prepare an income statement for the quarter ended September 30. (Do not leave any empty spaces; input a O wherever it is required.) COLERAIN CORPORATION Income Statement For the Quarter Ended September 30 Sales 0 Cost of goods sold Gross margin Selling and administrative expenses Operating income 0 Net income 4. Prepare a balance sheet as of September 30. COLERAIN CORPORATION Balance Sheet September 30 Assets Cash Accounts receivable Inventory Plant and equipment, net Total assets 0 Liabilities and Shareholders' Equity Accounts payable Common shares Retained earnings Total liabilities and shareholders' equity 0