Case in point, True Religion Apparel, Incorporated cash for wages. Let's take a moment to understand the cash wages here. The wages are extremely important because from a business operator perspective, you need to have enough cash to make payroll. There aren't too many things worse than not making payroll, as I mentioned. In the case of the lockdowns and shutdowns because of the COVID-19 pandemic, the companies that fared the best were the ones that were able to cut back on their expenses, including wages, as quickly as possible. Wages, particularly to a manufacturing company, are generally included in the cost of goods sold inventory calculation. This is what we call cost accounting. Ideally, we would want to separate the wages out of this calculation and also separate any front office wages out of the SGA expense if possible. Again, this isn't gonna be easy to do unless we have the data from financial management. On a weekly cash flow basis, there may not be a huge difference between the accrued wages and the cash wages. This will depend on the frequency of the payroll, as well as the amount of fixed salary versus hourly wages.

These differences can create swings from week to week and occasionally month to month. We will continue to use base analysis to solve these problems, only this one, unlike the last several, changes slightly. Here, we will need to look at past wages paid in cash. We have our beginning wages payable, we then accrue wages on the income statement for employment during the period when the revenues were generated, and then this gets reduced by the actual wages, which are paid in cash, which is what we're most interested in, and then that leaves us with an ending wages payable amount. So we have a choice here for the forecast as to whether or not we are going to make an assumption about the wages paid in cash or we're going to make an assumption about the ending wages payable. So in terms of the source data, again, we'll get the beginning wages payable from the previous balance sheet and wage expense will be forecast on the income statement. And, again, this is why it's important to be able to break these accounts out. In terms of the final two accounts, again, we have a choice. We can use an assumption to calculate ending wages payable or we can make an assumption about the payroll payments made in cash. That choice would most likely depend on whether we had a previously existing 13-week cash flow statement to look for data. In this case, we went with the forecast of the cash wages paid. This is typically as a percentage of the beginning balance of the total accruals, so this is what we have in gold. Using that assumption, we calculate the wages and salaries paid and that enables us to calculate an ending wages payable amount. Wages and salaries paid, however, is the number that we are most interested in. We're not really creating a balance sheet for the 13-week cash flow period. We're creating a cash flow statement.

Looking at the 13-week cash flow statement in detail, we can now drop in the payroll cash distributions, noticing, again, they are a little lumpy due to the salaried versus hourly difference and also the slow buildup to the store openings, which are happening in late May.