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:

Cash	$ 100,700
Accounts receivable	1,290,000
Inventories	798,600
Accounts payable	409,285

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 firms 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 months units of ending inventory should equal 110% of the next months cost of sales. The cost of each unit of inventory is $60. Selling, general, and administrative (SG&A) expenses, of which $1,100 is depreciation, equal 15% of the current months sales.

Actual and projected sales follow:

Month	Dollars	Units	Month	Dollars	Units
March	$ 1,080,000	12,000	June	$ 1,044,000	11,600
April	1,107,000	12,300	July	1,098,000	12,200
May	1,089,000	12,100	August	1,116,000	12,400

Required:

1. Prepare schedules showing budgeted merchandise purchases for May and June.

D. Tomlinson Retail
Budgeted Merchandise Purchases
May and June
	May	June	July
Cost of Goods Sold	$0	$0	$0
Total needed	$0	$0
Budgeted merchandise purchases	$0	$0

2. Prepare a schedule showing budgeted cash disbursements during June.

D. Tomlinson Retail
Budgeted Cash Disbursements, June
	May	June
Total payables	$0	$0
Budgeted cash disbursements		$0

3. Prepare a schedule showing budgeted cash collections during May.

D. Tomlinson Retail
Cash Collections
May
Within the discount period
After the discount period
Total cash collections	$0

4. Determine gross and net balances of accounts receivable on May 31.

	March		April		May		Total
Sales
Remaining AR %		%		%		%
AR Balance (Gross)							$0
Bad-debt allowance
AR Balance (Net)							$0