Harris Kidz is a retail store specializing in children s clothing. Harris s management accountant has gathered the following information for Harris Kidz. Month Sales Purchases July \$225,000 \$123,75

Harris Kidz is a retail store specializing in children’s clothing. Harris’s management accountant has

gathered the following information for Harris Kidz.

Month Sales Purchases

July \$225,000 \$123,750

August \$180,000 \$99,000

September \$240,000 \$132,000

October \$202,500 \$112,000

Cash is collected from customers in the following manner:

• Month of the sale 65%

• First month following the sale 25%

• Second month following the sale 8%

• Uncollectable 2%

Purchases of inventory are paid as follows:

• Cash payment in month of purchase 60%

• Cash payment in month following purchase 40%

Additional information:

• Labor costs equal 20% of sales

• Other operating costs equal \$35,000 per month, that amount includes \$8,750 of depreciation.

• Labor and operating costs are paid in the month incurred.

• The cash balance on September 1 is \$10,000.

Required: Show all supporting calculations.

1. Calculate the amount of cash receipts for August, September and October.

2. Calculate the amount of cash disbursements for August, September and October.

3. Calculate the cash balance at October 31.