Exercise $10-26($Algo$)$ Budgeted Cash Receipts and Cash Disbursements $[$LO $10-4]$

Timpco, a retailer, makes both cash and credit sales $($i$.$e$.,$ sales on open account$).$ Information regarding budgeted sales for the last quarter of the year is as follows:

$$OctoberNovemberDecemberCash sales$ $135,000$$ $111,000$$ $103,000$Credit sales$135,000133,200113,300$Total$ $270,000$$ $244,200$$ $216,300$

Past experience shows that $5\%$ of credit sales are uncollectible. Of the credit sales that are collectible, $60\%$ are collected in the month of sale; the remaining $40\%$ are collected in the month following the month of sale. Customers are granted a $1\mathrm{.}5\%$ discount for payment within $10$ days of billing. Approximately $75\%$ of collectible credit sales take advantage of the cash discount.

Inventory purchases each month are $100\%$ of the cost of the following month$$s projected sales. $($The gross profit rate for Timpco is approximately $30\%.)$ All merchandise purchases are made on credit, with $20\%$ paid in the month of purchase and the remainder paid in the following month. No cash discounts for early payment are available.