1. All sales at Meeks Company, a wholesaler, are made on credit. Experience has shown that 70% of the accounts receivable are collected in the month of the sale, 26% are collected in the month following the sale, and the remaining 4% are uncollectible. Actual sales for March and budgeted sales for the following four months are given below:

March (actual sales) $200,000 April $300,000 May $500,000 June $700,000 July $400,000
The company’s cost of goods sold is equal to 60% of sales. All purchases of inventory are made on credit. Meeks Company pays for one half of a month’s purchases in the month of purchase, and the other half in the month following purchase. The company requires that end-of-month inventories be equal to 25% of the cost of goods sold for the next month.

Required:
a. Compute the amount of cash, in total, which the company can expect to collect in May.
b. Compute the budgeted dollar amount of inventory which the company should have on hand at the end of April.
c. Compute the amount of inventory that the company should purchase during the months of May and June.
d. Compute the amount of cash payments that will be made to suppliers during June for purchases of inventory.

2. The Fraley Company, a merchandising firm, has planned the following sales for the next four months:

March April May June Total budgeted sales $50,000 $70,000 $90,000 $60,000
Sales are made 40% for cash and 60% on account. From experience, the company has learned that a month’s sales on account are collected according to the following pattern:
Month of sale 70% First month following month of sale 20% Second month following month of sale 8% Uncollectible 2%
The company requires a minimum cash balance of $4,000 to start a month.

Required:
a. Compute the budgeted cash receipts for June.
b. Assume the following budgeted data for June:

Purchases $52,000 Selling and administrative expenses $10,000 Depreciation $8,000 Equipment…