Aztec Company sells its product for $160 per unit. Its actual and budgeted sales follow.

	May (Actual)	June (Budget)	July (Budget)	August (Budget)
Sales units	2,000	4,500	3,500	4,400
Sales dollars	$ 320,000	$ 720,000	$ 560,000	$ 704,000

All sales are on credit. Collections are as follows: 28% is collected in the month of the sale, and the remaining 72% 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 21% of the next months unit sales. The May 31 actual inventory level of 945 units is consistent with this policy. Selling and administrative expenses of $110,000 per month are paid in cash. The companys 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 1.0% monthly interest rate. On May 31, the loan balance is $35,000, and the companys 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 Mays budgeted merchandise purchases is $277,750. 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.)

AZTEC COMPANY
Cash Budget
June and July
	June	July
Beginning cash balance
Add: Cash receipts from sales
Total cash available
Less: Cash payments for:
Merchandise purchases
Selling and administrative expenses
Interest expense
Cash receipts from sales
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
Additional loan (loan repayment)
Loan balance - End of month

Required 3