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	5,000	4,000	3,600
Sales dollars	$ 300,000	$ 750,000	$ 600,000	$ 540,000

All sales are on credit. Collections are as follows: 22% is collected in the month of the sale, and the remaining 78% 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 23% of the next months unit sales. The May 31 actual inventory level of 1,150 units is consistent with this policy. Selling and administrative expenses of $134,000 per month are paid in cash. The companys minimum cash balance at month-end is $130,000. Loans are obtained at the end of any month when the preliminary cash balance is below $130,000. Any preliminary cash balance above $130,000 is used to repay loans at month-end. This loan has a 1.5% monthly interest rate. On May 31, the loan balance is $32,000, and the companys cash balance is $130,000. 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 Mays budgeted merchandise purchases is $295,900. 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.

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.)

Prepare a schedule of cash receipts from sales for each of the months of June and July.

AZTEC COMPANY
Schedule of Cash Receipts from Sales
	May	June	July
Sales	$300,000	$750,000	$600,000
Cash receipts from:
Collections of current period sales		$165,000	$132,000
Collections of prior period sales		234,000	585,000
Total cash receipts		$399,000	$717,000

Prepare the merchandise purchases budget for June and July.

AZTEC COMPANY
Merchandise Purchases Budgets
	June	July
Budgeted sales units	5,000	4,000
Calculation of desired ending inventory
Next period budgeted sales units	4,000	3,600
Ratio of inventory to future sale	23%	23%
Add: Desired ending inventory	920	828
Total required units	5,920	4,828
Less: Beginning inventory units	1,150	920
Units to purchase	4,770	3,908
Cost per unit	$110	$110
Cost of merchandise purchases	$524,700	$429,880

Prepare a schedule of cash payments for merchandise purchases for June and July. Assume Mays budgeted merchandise purchases is $295,900.

AZTEC COMPANY
Schedule of Cash Payments for Merchandise Purchases
	May	June	July
Merchandise purchases	$295,900	$524,700	$429,880
Cash payments for
Current period purchases		$314,820	$257,928
Prior period purchases		118,360	171,952
Total cash payments for merch. purchases		$433,180	$429,880

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	$130,000	$130,000
Add: Cash receipts from sales
Total cash available
Less: Cash payments for:
Merchandise purchases
Cash receipts from sales
Interest expense
Additional loan (loan repayment)	0	0
Total cash payments	0	0
Preliminary cash balance
Additional loan (loan repayment)
Ending cash balance	$0	$0
Loan balance
	June	July
Loan balance - Beginning of month	$32,000
Additional loan (loan repayment)	480
Loan balance - End of month	$32,480