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	2,400	4,500	3,500	3,600
Sales dollars	$ 384,000	$ 720,000	$ 560,000	$ 576,000

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 19% of the next months unit sales. The May 31 actual inventory level of 855 units is consistent with this policy. Selling and administrative expenses of $112,000 per month are paid in cash. The companys minimum cash balance at month-end is $120,000. Loans are obtained at the end of any month when the preliminary cash balance is below $120,000. Any preliminary cash balance above $120,000 is used to repay loans at month-end. This loan has a 0.5% monthly interest rate. On May 31, the loan balance is $48,000, and the companys cash balance is $120,000. 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 $307,890. 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.