All sales of Jenny’s Jeans and Uniforms (JJU) are made on credit. Sales are billed twice monthly, on the 5th of the month for the last half of the prior month’s sales and on the 20th 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 percent 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 

Within the 10-day discount period.....80% 

At 30 days after billing.........................18% 

Uncollectible...........................................2% 

Sales for May 2012 were $700,000. The forecast sales for the next four months are

June...........$800,000 

July..............950,000 

August.........900,000 

September..600,000

JJU’s average markup on its products is 40 percent 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 percent 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 2012? 

2. Compute the budgeted dollar value of JJU inventory on May 31, 2012. 

3. How much merchandise should JJU plan to purchase during June 2012? 

4. How much should JJU budget in August 2012 for cash payments for merchandise purchased?