Aztec Company sells its product for $150 per unit. Its actual and budgeted sales follow.

May (Actual) June (Budget) July (Budget) August (Budget)

Sales units 2,000 6,000 5,000 3,900

Sales dollars $ 300,000 $ 900,000 $ 750,000 $ 585,000

All sales are on credit. Collections are as follows: 24% is collected in the month of the sale, and the remaining 76% is collected in the month following the sale. Merchandise purchases cost $110 per unit. For those purchases, 60% is paid in the month of purchase and the other 40% is paid in the month following purchase. The company has a policy to maintain an ending monthly inventory of 19% of the next month's unit sales. The May 31 actual inventory level of 1,140 units is consistent with this policy. Selling and administrative expenses of $166,000 per month are paid in cash. The company's minimum cash balance at month-end is $110,000. Loans are obtained at the end of any month when the preliminary cash balance is below $110,000. Any preliminary cash balance above $110,000 is used to repay loans at month-end. This loan has a 0.5% monthly interest rate. On May 31, the loan balance is $41,000, and the company's cash balance is $110,000. Required: 1.Prepare a schedule of cash receipts from sales for each of the months of June and July. 2.Prepare the merchandise purchases budget for June and July. 3.Prepare a schedule of cash payments for merchandise purchases for June and July. Assume May's budgeted merchandise purchases is $303,600. 4.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.

Complete this question by entering your answers in the tabs below.

Prepare the merchandise purchases budget for June and July.

AZTEC COMPANY
Merchandise Purchases Budgets
	June	July
Budgeted sales units
Calculation of desired ending inventory
Next period budgeted sales units	5000	3900
Ratio of inventory to future sale	19%	19%
Add: Desired ending inventory
Total required units
Less: Beginning inventory units
Units to purchase
Cost per unit
Cost of merchandise purchases

Prepare a schedule of cash payments for merchandise purchases for June and July. Assume May's budgeted merchandise purchases is $303,600.

AZTEC COMPANY
Schedule of Cash Payments for Merchandise Purchases
	May	June	July
Merchandise purchases	$303,600
Cash payments for
Current period purchases
Prior period purchases		121,440
Total cash payments for merch. purchases		$121,440	$0

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.(Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your answers to the nearest whole dollars.)

AZTEC COMPANY
Cash Budget
June and July
	June	July
Beginning cash balance	$110,000	$110,000
Add: Cash receipts from sales	444,000
Total cash available	554,000
Less: Cash payments for:
Merchandise purchases
Selling and administrative expenses	166,000	166,000
Interest expense	205
	0	0
Total cash payments	166,205	166,724
Preliminary cash balance
Additional loan (loan repayment)
Ending cash balance	$	$
Loan balance
	June	July
Loan balance - Beginning of month	$41,000
Additional loan (loan repayment)
Loan balance - End of month	$41,000