All sales of Aegan Electronics Supply are made on credit. Sales are billed twice monthly, on the 10th of the month for sales made in the last half of the prior month, and on the 20th of the month for sales made in the first half of the current month. When payments are made in the month of the sale, the sale qualifies for a 2% discount. The expected collection experience of accounts receivable is as follows:

Within the discount period......................................80%
In the second month................................................18%
Uncollectible................................................................2%

Sales for the month of May were $750,000. Forecast sales for the next four months are as follows:

June...............................................$400,000
July...................................................450,000
August.............................................450,000
September......................................300,000

Aegan’s cost of sales is 75% of revenue. Aegan purchases sufficient merchandise for resale to meet the current month’s sales and to have an ending inventory of 25% of the next month’s forecast sales. All purchases are on credit. Aegan pays for one-half of a month’s purchases in the month of purchase and the other half in the month following purchase. All purchases and sales occur evenly throughout the month.

Required:

1. How much will be collected in September?

2. What is the amount of expected collections during August for sales made in July?

3. How much merchandise should be purchased in July and in August?

4. What is the amount of disbursements in August?

5. Calculate the net cash flow from sales and purchases in August.