Part B You have prepared the following sales budget:

Month Cash Sales Credit Sales

May $26,000 $78,000

June 25,000 70,000

July 28,000 75,000

August 14,000 82,000

September 22,000 77,000

Collections are 30% in the month of sale, 50% in the month following the sale, and 18% two months following the sale. The remaining 2% is expected to be uncollectible.

Required:

a. Prepare a schedule of cash collections for July through September. (6 marks)

b. Discuss the pros and cons when employees build slacks (budget slacks) into a budget?