(CMA) Cash and inventory budget The Russon Corporation is a retailer whose sales are all made on credit. Sales are billed twice monthly, on the 10th of the month for the last half of the prior month's sales and on the 20th of the month for the first half of the current month's sales. The terms of all sales are 2/10, net 30. Based on past experience, the collection of accounts receivable is as shown on the following page:

Transcribed Image Text:

Within the discount period On the 30th day Uncollectible 80% 18% 2% Russon's average markup on its products is 20 percent of the sales price. The sales value of shipments for May and the forecast for the next four months are: May (actual). June July August September $500,000 600,000 700,000 700,000 400,000 Russon purchases merchandise for resale to meet the current month's sales demand and to maintain a desired monthly ending inventory of 25 percent of the next month's sales. All purchases are on credit with terms of net 30. Russon pays for one-half of a month's purchases in the month of purchase and the other half in the month following the purchase. All sales and purchases occur uniformly throughout the month.