The data below pertains to the third quarter of Gerash Company which manufactures swimming shorts.

Below is the estimated sales (in units):

July	40,000
August	50,000
September	85,000
October	30,000
November	15,000
December	25,000

1. The selling price of the swimming shorts is $10 per unit.
2. All sales are on account. Based on past experience, sales are collected in the following pattern:

Month of sale	30%
Month following sale	65%
Uncollectible	5%

3. Sales for June totaled $400,000.
4. The company maintains finished goods inventories equal to 20% of the following month's sales. This requirement will be met at the end of June.
5. Each swimming shorts requires 3 pounds of raw materials.
6. The company requires that the ending inventory of raw materials be equal to 10% of the following month's production needs.
7. The raw material costs $1.50 per pound.
8. 40% of a month's purchases of raw materials is paid for in the month of the purchase; the remainder is paid for in the following month.
9. The Accounts Payable on June 30 will be $80,000

Required: Prepare:

1. Prepare a sales budget, by month and in total, for the Third quarter. (3 marks)
2. Prepare a schedule of expected cash collections, by month and in total, for the Third quarter. (15 marks)
3. Prepare a production budget for each of the months July, August, September and October. (10 marks)
4. Prepare a direct materials budget, by month and in total, for the Third quarter. (12 marks)
5. Prepare a schedule of expected cash disbursements, by month and in total, for the Third quarter. (15 marks)