Exercise 10-32 (Algo) Retailer Budget (LO 10-4] 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 Accounts receivable Inventories Accounts payable $ 100,600 860,000 504,000 270,664 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 105% of the next month's cost of sales. The cost of each unit of inventory is $40. Selling, general, and administrative (SG&A) expenses, of which $1,000 is depreciation, equal 15% of the current month's sales. Actual and projected sales follow: Month March April May Dollars $ 714,000 732,000 720,000 Units 11,900 12,200 12,000 Month June July August Dollars $ 690,000 726,000 738,000 Units 11,500 12,100 12,300 Required: 1. Prepare schedules showing budgeted merchandise purchases for May and June. 2. Prepare a schedule showing budgeted cash disbursements during June. 3. Prepare a schedule showing budgeted cash collections during May. 4. Determine gross and net balances of accounts receivable on May 31. D. Tomlinson Retail Budgeted Merchandise Purchases May and June May June July Cost of Goods Sold $ 0 $ 0 $ 0 Total needed $ 0 $ Budgeted merchandise purchases $ 0 $ 0 Required 1 Required 2 Required 3 Required 4 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 Required 1 Required 2 Required 3 Required 4 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 Required 1 Required 2 Required 3 Required 4 Determine gross and net balances of accounts receivable on May 31. March April May Total % % % Sales Remaining AR % AR Balance (Gross) Bad-debt allowance AR Balance (Net) $ 0 $ 0 0