Problem $13-63($Algo$)$ Budgeted Purchases and Cash Flows $($LO $13-3,4,5)$

Oakley Wholesale Hardware and Supplies $($OWHS$)$ sells tools, lumber, and other remodeling supplies to commercial contractors. The company controller is compiling cash and other budget information for July, August, and September. On June $30,$ the company had inventories of $$495,000.$

OWHS sells a wide variety of products, but for budgeting and inventory planning purposes, the company has developed a standard "unit" of inventory that reflects roughly the mix and purchase costs of the items found in inventory and expected sales volume. The inventory value of $$495,000$ reported above is based on these inventory units. Each inventory unit is assumed to have a purchase price from vendors $($for planning purposes$)$ of $$30.$ This number is not expected to change in the next three months.

The budget is to be based on the following assumptions:

Each month's sales are billed on the last day of the month.

Customers are allowed a $5$ percent discount if payment is made within $10$ ditys after the billing date. Receivables are recorded in the accounts at their gross amounts $($not net of discounts$).$

The billings are collected as follows: $75$ percent within the discount period, $15$ percent by the end of the month, and $8$ percent by the end of the following month. Two percent is uncollectible.

Purchase data are as follows:

For both purchases of inventory merchandise and selling, general, and administrative expenses, $70$ percent is paid in the month purchased and the remainder in the following month.

The number of units in each month's ending inventory equals $90$ percent of the next month's units of sales.

Selling, general, and administrative expenses, of which $$21,000$ is depreciation, equal $20$ percent of the current month's sales.

Actual and projected sales follow:

$\backslash$table$[[,$Dollars,Units$],[$May$,$$$688,400,21,600],[$June$,704,000,22,000]]$