# Question: All sales of Tracy s Jeans and Uniforms TJU are made

All sales of Tracy’s Jeans and Uniforms (TJU) are made on credit. Sales are billed twice monthly, on the fifth of the month for the last half of the prior month’s sales and on the twentieth of the month for the first half of the current month’s sales. For accounts paid within the first 10 days after the billing date, TJU gives customers a 2% discount; otherwise the full amount is due within 30 days of the billing date, and customers that do not pay within the 10-day discount period generally wait the full 30 days before making payment. Based on past experience, the collection experience of accounts receivable is as follows:
Within the 10-day discount period . 70%
At 30 days after billing ...... 28%
Uncollectible .......... 2%

Sales for May 20X8 were \$790,000. The forecast sales for the next 4 months are as follows:
June ......... \$810,000
July ........... 990,000
August ........ 940,000
September ....... 660,000
TJU’s average markup on its products is 40% of the sales price.
TJU purchases merchandise for resale to meet the current month’s sales demand and to maintain a desired monthly ending inventory of 25% of the next month’s cost of goods sold. All purchases are on credit. TJU pays for one-half of a month’s purchases in the month of purchase and the other half in the month following the purchase.
All sales and purchases occur uniformly throughout the month.
1. How much cash can TJU plan to collect from accounts receivable collections during July 20X8?
2. Compute the budgeted dollar value of TJU inventory on May 31, 20X8.
3. How much merchandise should TJU plan to purchase during June 20X8?
4. How much should TJU budget in August 20X8 for cash payments for merchandise purchased?

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