Please explain.

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 $ 5,700 499,000 328,800 153,157 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 120% of the next month's cost of sales. The cost of each unit of inventory is $20. Selling, general, and administrative (SG&A) expenses, of which $2,800 is depreciation, equal 15% of the current month's sales. Actual and projected sales follow: Month March April Dollars $ 408,000 417,000 411,000 Units 13,600 13,900 13,700 Month June July August Dollars $396,000 414,000 420,000 Units 13,200 13,800 14,000 May 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. Prepare schedules showing budgeted merchandise purchases for May and June. July D. Tomlinson Retail Budgeted Merchandise Purchases May and June May June Sales (in units) Cost per unit C C Cost of Goods Sold $ 0 $ Ending inventory Total needed $ 0 $ Beginnning inventory Budgeted merchandise purchases 0 $ 0 $ 0 Prepare a schedule showing budgeted cash disbursements during June. June D. Tomlinson Retail Budgeted Cash Disbursements, June May Merchandise purchases Non-depreciation S, G&A expenses Total payables Payment for the current month's payables Payment for amount owed from last month Budgeted cash disbursements 0 $ Prepare a schedule showing budgeted cash collections during May. D. Tomlinson Retail Cash Collections May From April credit sales: Within the discount period After the discount period Collection of credit sales made in March Total cash collections 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) $