Textbook Exercise $-11\mathrm{.}40$

Cash Budgeting

Tomlinson Retail is preparing its cash budget for May. The following information pertaining to sales and purchases relates to Tomlinson Retail:

Sales:

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

b$.$ Customers are allowed a $2\%$ discount if payment is made within $10$ days after the billing date.

c$.60\%$ of the billings are collected within the discount period, $20\%$ are collected by the end of the month following the date of sale, $15\%$ are collected by the end of the second month after the date of sale and $5\%$ prove to be uncollectable.

Purchases:

a$.54\%$ of all purchases of inventory are paid in the month purchased and the remainder in the following month.

b$.$ Tomlinson requires that each month's units of ending inventory is equal to $120\%$ of the next month's units of sales.

c$.$ The cost of each unit of inventory is $$10.$

d$.$ Total sales, general and administration $($SGA$)$ expenses are equal to $10\%$ of the current month's sales plus $$2500$ of depreciation. $60\%$ of SGA expenses are paid in the month incurred and the remainder in the following month.

Actual and projected sales are:

$\backslash$table$[[,($$$),$Units$],[$March$,177000,11800],[$April$,181500,12100],[$May$,178500,11900],[$June$,171000,11400],[$July$,180000,12000],[$August$,183000,12200]]$

Required

Prepare the following schedules for Tomlinson Retail for May:

a schedule of cash collections

a schedule of cash payments collections.