D. Tomlinson Retail seeks your assistance in developing cash and other budget information for May, June, and July. The store expects to have the following balances at the end of April: $ 5,100 478,000 327,500 146,579 Cash Accounts receivable Inventories Accounts payable The firm follows these guidelines in preparing its budgets: • Sales. All sales are on credit with terms of 3/10, n/30. Tomlinson bills customers on the last day of each month. The firm books receivables at gross amounts and collects 60% of the billings within the discount period, 25% by the end of the month, and 9% by the end of the second month. The firm's experience suggests that 6% is likely to be uncollectible and is written off at the end of the third month. • Purchases and expenses. All purchases and expenses are on open account. The firm pays its payables over a 2-month period with 54% paid in the month of purchase. Each month's units of ending inventory should equal 125% of the next month's cost of sales. The cost of each unit of inventory is $20. Selling, general, and administrative (SG&A) expenses, of which $2,200 is depreciation, equal 15% of the current month's sales. Actual and projected sales follow: Actual and projected sales follow: Units 13,000 13,300 13,100 Month Dollars Month Dollars Units $390,000 399,000 393,000 $378,000 396,000 402,000 12,600 13,200 March June April July August May 13,400 Prepare schedules showing budgeted merchandise purchases for May and June. Prepare a schedule showing budgeted cash disbursements during June. Prepare a schedule showing budgeted cash collections during May. Determine gross and net balances of accounts receivable on May 31.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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D. Tomlinson Retail seeks your assistance in developing cash and other budget information for May, June, and July. The store expects
to have the following balances at the end of April:
$ 5,100
478,000
327,500
146,579
Cash
Accounts receivable
Inventories
Accounts payable
The firm follows these guidelines in preparing its budgets:
Sales. All sales are on credit with terms of 3/10, n/30. Tomlinson bills customers on the last day of each month. The firm books
receivables at gross amounts and collects 60% of the billings within the discount period, 25% by the end of the month, and 9% by
the end of the second month. The firm's experience suggests that 6% is likely to be uncollectible and is written off at the end of the
third month.
Purchases and expenses. All purchases and expenses are on open account. The firm pays its payables over a 2-month period with
54% paid in the month of purchase. Each month's units of ending inventory should equal 125% of the next month's cost of sales. The
cost of each unit of inventory is $20. Selling, general, and administrative (SG&A) expenses, of which $2,200 is depreciation, equal
15% of the current month's sales.
Actual and projected sales follow:
Actual and projected sales follow:
Month
Dollars
Units
Month
Dollars
Units
$390,000
399,000
393,000
$378,000
396,000
402,000
12,600
13,200
13,400
March
13,000
13,300
13,100
June
April
July
August
Мay
Prepare schedules showing budgeted merchandise purchases for May and June.
Prepare a schedule showing budgeted cash disbursements during June.
Prepare a schedule showing budgeted cash collections during May.
Determine gross and net balances of accounts receivable on May 31.
Transcribed Image Text:D. Tomlinson Retail seeks your assistance in developing cash and other budget information for May, June, and July. The store expects to have the following balances at the end of April: $ 5,100 478,000 327,500 146,579 Cash Accounts receivable Inventories Accounts payable The firm follows these guidelines in preparing its budgets: Sales. All sales are on credit with terms of 3/10, n/30. Tomlinson bills customers on the last day of each month. The firm books receivables at gross amounts and collects 60% of the billings within the discount period, 25% by the end of the month, and 9% by the end of the second month. The firm's experience suggests that 6% is likely to be uncollectible and is written off at the end of the third month. Purchases and expenses. All purchases and expenses are on open account. The firm pays its payables over a 2-month period with 54% paid in the month of purchase. Each month's units of ending inventory should equal 125% of the next month's cost of sales. The cost of each unit of inventory is $20. Selling, general, and administrative (SG&A) expenses, of which $2,200 is depreciation, equal 15% of the current month's sales. Actual and projected sales follow: Actual and projected sales follow: Month Dollars Units Month Dollars Units $390,000 399,000 393,000 $378,000 396,000 402,000 12,600 13,200 13,400 March 13,000 13,300 13,100 June April July August Мay Prepare schedules showing budgeted merchandise purchases for May and June. Prepare a schedule showing budgeted cash disbursements during June. Prepare a schedule showing budgeted cash collections during May. Determine gross and net balances of accounts receivable on May 31.
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