All sales of Jenny’s Jeans and Uniforms (JJU) 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, JJU gives customers a 3 per cent 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:

JJU’s average markup on its products is 40 per cent of the sales price.

JJU purchases merchandise for resale to meet the current month’s sales demand and to maintain a desired monthly ending inventory of 25 per cent of the next month’s cost of goods sold. All purchases are on credit. JJU 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 JJU plan to collect from accounts receivable collections during July 20X8?

2. Compute the budgeted euro value of JJU inventory on May 31, 20X8.

3. How much merchandise should JJU plan to purchase during June 20X8?

4. How much should JJU budget in August 20X8 for cash payments for merchandise purchased?

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Within the 10-day discount period At 30 days after billing Uncollectible 80% 18% 2% Sales for May 20X8 were €700,000. The forecast sales for the next 4 months are as follows: €800,000 950,000 900,000 600,000 June July August September