Prepare a statement of estimated cash receipts and disbursements for October
2007 for the Aquarius Company, which sells one product, herbal soap, by the
case. On October 1, 2007, part of the trial balance showed:

The company pays for its purchases within 10 days. Assume that one-third
of the purchases of any month are due and paid for in the following month.
The cost of the merchandise purchased is $12 per case. At the end of each
month it is desired to have an inventory equal in units to 50 percent of the following
month’s sales in units.
Sales terms include a 1 percent discount if payment is made by the end of
the calendar month. Past experience indicates that 60 percent of the billings will
be collected during the month of the sale, 30 percent in the following calendar
month, and six percent in the next following calendar month. Four percent will
be uncollectible. The company’s fiscal year begins August 1.

Exclusive of bad debts, total budgeted selling and general administrative
expenses for the fiscal year are estimated at $55,500, of which $18,000 is fixed
expense, which includes a $7,200 annual amortization charge. Aquarius incurs
these fixed expenses uniformly throughout the year. The balance of the selling
and general administrative expenses varies with sales. Expenses are paid as
incurred.

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Cash Accounts receivable Allowance for bad debts Merchandise inventory Accounts payable, merchandise $ 4,800 15,600 1,900 9,000 7,200