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

	Units	Dollars
April (actual)	5,000	$	800,000
May (actual)	2,000		320,000
June (budgeted)	5,500		880,000
July (budgeted)	4,500		879,000
August (budgeted)	4,000		640,000

All sales are on credit. Recent experience shows that 26% of credit sales is collected in the month of the sale, 44% in the month after the sale, 26% in the second month after the sale, and 4% proves to be uncollectible. The products 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 24% of the next months unit sales plus a safety stock of 95 units. The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,440,000 and are paid evenly throughout the year in cash. The companys minimum cash balance at month-end is $110,000. This 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 going below the minimum. This type of loan carries an annual 11% interest rate. On May 31, the loan balance is $44,500, and the companys cash balance is $110,000.

Required: 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 activity and interest expense. Compute the loan balance at the end of each month.

Required 4

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

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

Cash payments on product purchases (for June and July)
		------------------ Percent Paid in---------------
		May	June	July
From purchases in:
May
June
July
		------------------ Amount Paid in---------------
	Total	May	June	July
From purchases in:
May
June
July

• Required 5

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.)

AZTEC COMPANY
Cash Budget
June and July
	June	July
Beginning cash balance
Total cash available
Cash payments for:
Total cash payments
Preliminary cash balance
Ending cash balance
Loan balance
	June	July
Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance - End of month