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

UnitsDollars

April (actual)5,000$800,000

May(actual)2,600416,000

June(actual)6,000960,000

July(actual)5,000959,000

August(actual)4,200672,000

All sales are on credit. Recent experience shows that 20% of credit sales is collected in the month of the sales, 50% in the month after the sale, 27% in the second month after the sale, and 3% proves to be uncollectible.The product's purchase is $110 per unit, 60% of the purchase made in the 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 19% of the next month's unit sales plus a safety stock of 145 units.The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,428,000 and are paid evenly througnout the year in cash.The company's minimum cash balance at month-end is $110,000. The minimum is maintained, 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 gong below the minimum. This type of loan carries an annual 13% interest rate, On May 31, the loan balance is $37,000, and the company's cash balance is $110,000.

1.Prepare schedule that shows the computation of cash collections of its credit sales (account receivable) in each of the months of June and July

2.Prepare schedule that shows the computation of budgeted ending inventories (in units) for April, May, June, and July

3.Prepare the merchandise purchases budget May, June and July.Report calculations in units and then show the dollar amount of purchases for each month.

4.Prepare schedule showing the computation of cash payments for product purchases for June and July

5.Prepare cash budget for June and July, including any loan activity and interest expense. Compute the loan balance at the end of each month.