Answer:
The Peoria Supply Company
a. Schedule of Estimated Cash Collections:
Cash collections:                   July       
50% sales month              $25,500
less 2% cash discount             (510)
40% following month          16,800
8% second month                2,400
Total collections               $44,190
b. A Schedule of Estimated July Cash Payments for Purchases
                                       June         July
Sales                         $42,000    $51,000 
Ending inventory         18,000*    27,000
Beginning inventory   21,000      18,000*
Estimated Purchases 39,000    60,000
Payment for purchases:
50% purchase month              $30,000
50% following month                 19,500
Total payment for purchases $49,500
c. Selling and administrative expenses
Non-Cash expenses:
Depreciation expense $1,667
Cash disbursements:
Other fixed costs          5,333
Variable costs               6,375
Total costs                 $13,375
Explanation:
a) Data and Calculations:
Selling price per product = $30
Purchase cost per product = $20
Total sales dollars for next year = $720,000
Month Sales Revenue
May         $30,000
June          42,000
July            51,000
August     54,000
July 1:
Cash balance = $20,000
Merchandise inventory $18,000
Accounts receivable (sales) 23,000
Accounts payable (purchases) 12,000
Ending inventory = $27,000 ($54,000 * 50%)
Ending inventory = 50% of next month's budgeted sales
Selling and administrative expenses (excluding bad debts) for the year = $180,000
Fixed costs = $90,000
Depreciation    20,000
Cash fixed costs = $70,000
Monthly fixed costs = $5,833
Variable costs = $90,000
Variable costs per sales dollars = $90,000/$720,000 = $0.125
Cash variable cost for July $0.125 * $51,000 = $6,375
a. Schedule of Estimated Cash Collections:
Cash collections:                May        June         July       August
                                       $30,000 $42,000   $51,000  $54,000
50% sales month             15,000    21,000    25,500     27,000
less 2% cash discount        (300)       (420)        (510)         (540)
40% following month                                      16,800     20,400
8% second month                                            2,400        3,360
2% Uncollectible