20.11

All sales are on credit. Recent experlence shows that 28% of credit sales is collected in the month of the sale, 42% In the month after the sale, 25% In the second month after the sale, and 5% proves to be uncollectible. The product's purchase price Is $110 per unit. 60% of purchases made In a month is paid in that month and the other 40% Is paid In the next month. The company has a policy to maintain an ending monthly Inventory of 21% of the next month's unit sales plus a safety stock of 60 units. The Aprll 30 and May 31 actual Inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,500,000 and are pald evenly throughout the year in cash. The company's minimum cash balance at month-end is $110,000. This minimum Is maintalned, If necessary, by borrowing cash from the bank. If the balance exceeds $110,000, the company repays as much of the loan as it can without going below the minImum. This type of loan carrles an annual 11% Interest rate. On May 31 , the loan balance Is $47,500, and the company's cash balance is $110,000. Required: 1. Prepare a schedule that shows the computation of cash collections of its credit sales (accounts recelvable) in each of the months of June and July. 2. Prepare a schedule that shows the computation of budgeted ending Inventorles (In units) for April, May, June, and July. 3. Prepare the merchandise purchases budget for May, June, and July. Report calculations in units and then show the dollar amount of purchases for each month. 4. Prepare a schedule showing the computation of cash payments for product purchases for June and July. 5. Prepare a cash budget for June and July, Including any loan actlvity and Interest expense. Compute the loan balance at the end of each month. Prepare a schedule that shows the computation of cash collections of its credit sales (accounts receivable) in each of the months of lune and lulv. Prepare a schedule that shows the computation of budgeted ending inventories (in units) for April, May, June, and July. Prepare a schedule that shows the computation of budgeted ending inventories (in units) for April, May, June, and July. Prepare a schedule showing the computation of cash payments for product purchases for June and July. Prepare a cash budget for June and July, including any loan activity and interest expense. Compute the loan balance at the end of each month. (Do not round intermediate calculations. Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar value.) \begin{tabular}{|l|l|l|} \hline \multicolumn{2}{|c|}{ Loan balance } \\ \hline & \multicolumn{1}{|c|}{ June } & July \\ \hline Loan balance - Beginning of month & & \\ \hline Additional loan (loan repayment) & & \\ \hline Loan balance - End of month & & \\ \hline \end{tabular}