David Campbell's Men's Store purchases clothing evenly throughout the month. All pur¬

chases are on account. On the first of every month, Moira Campbell, David's wife, pays for all of the previous month's purchases. Terms are 2/10, n/30 (i.e., a 2% discount can be taken if the bill is paid within 10 days; otherwise the entire amount is due within 30 days).

The forecast purchases for the months of May through September are as follows:

Required:
1. Prepare a cash disbursements schedule for the months of August and September.
2. Now suppose that David wants to see what difference it would make to have someone pay for any purchases that have been made three times per month, on the 1st, the 11th, and the 21st. Prepare a cash disbursements schedule for the months of July and August assuming this new payment schedule.
3. Suppose that Moira (who works full-time as a school teacher and is the mother of two small children) does not have time to make payments on two extra days per month and that a temporary employee is hired on the 11th and 21st at $22 per hour, for 4 hours each of those two days. Is this a good decision? Explain.

Transcribed Image Text:

May $48,000 June 25,000 July 35,000 August 40,000 September 50,000