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

	Units	Dollars
April (actual)	4,000	$	640,000
May (actual)	2,800		448,000
June (budgeted)	4,500		720,000
July (budgeted)	3,500		719,000
August (budgeted)	3,900		624,000

All sales are on credit. Recent experience shows that 22% of credit sales is collected in the month of the sale, 48% in the month after the sale, 27% in the second month after the sale, and 3% 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 18% 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 $1,668,000 and are paid evenly throughout the year in cash. The companys minimum cash balance at month-end is $120,000. This minimum is maintained, if necessary, by borrowing cash from the bank. If the balance exceeds $120,000, the company repays as much of the loan as it can without going below the minimum. This type of loan carries an annual 12% interest rate. On May 31, the loan balance is $46,500, and the companys cash balance is $120,000. 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.

AZTEC COMPANY Cash Budget June and July June $ 120,000 July 120,000 $ Beginning cash balance Cash receipts from customers Total cash available Cash payments for: Purchases Selling and administrative expenses 421,784 425,832 Interest expense 465 422,249 425,832 Total cash payments Preliminary cash balance Additional loan (loan repayment) Ending cash balance $ 0 $ 0 Loan balance July June 46,500 $ Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month $ 46,500