Aztec Company sells its product for $170 per unit. Its actual and budgeted sales follow.

Units

Dollars

April (actual)

5,000

$

850,000

May (actual)

2,000

340,000

June (budgeted)

5,500

935,000

July (budgeted)

4,500

934,000

August (budgeted)

4,000

680,000

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, 27% in the second month after the sale, and 3% proves to be uncollectible. The product's 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 month's unit sales plus a safety stock of 110 units. The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,260,000 and are paid evenly throughout the year in cash. The company's 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 13% interest rate. On May 31, the loan balance is $32,500, and the company's cash balance is $110,000.

Required:

1.a schedule that shows the computation of cash collections of its credit sales (accounts receivable) in each of the months of June and July.

2. a schedule that shows the computation of budgeted ending inventories (in units) for April, May, June, and July.

3.the merchandise purchases budget for May, June, and July. Report calculations in units and then show the dollar amount of purchases for each month.

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

5.a cash budget for June and July, including any loan activity and interest expense. Compute the loan balance at the end of each month.

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

60%

40%

June

60%

40%

July

60%

------------------ Amount Paid in---------------

Total

May

June

July

From purchases in:

May

$232,100

$139,260

$92,840

June

562,100

337,260

224,840

July

507,100

304,260

$139,260

$430,100

$529,100

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

$110,000

$110,000

Cash receipts from customers

Total cash available

Cash payments for:

Purchases

Selling and administrative expenses

Interest expense

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