Aztec Company sells its product for $180 per unit. Its actual and budgeted sales follow. Units Dollars April (actual). 4,000 $ 720,000 May (actual). 2,000 360,000 June (budgeted). 6,000 1,080,000 July (budgeted).. 5,000 900,000 August (budgeted) 3,800 684,000 Prob Merc Prepa of ca supp purc P4 14 All sales are on credit. Recent experience shows that 20% of credit sales is collected in the month of the sale, 50% in the month after the sale, 28% in the second month after the sale, and 2% 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 20% of the next month's unit sales plus a safety stock of 100 units. The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,320,000 and are paid evenly throughout the year in cash. The company's minimum cash balance at month-end is $100,000. This minimum is maintained, if necessary, by bor- rowing cash from the bank. If the balance exceeds $100,000, 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 $25,000, and the company's cash balance is $100,000. (Round amounts to the nearest dollar.) Required 1. Prepare a schedule that shows the computation of cash collections of its credit sales (accounts receiv- able) in each of the months of June and July. CI Ju 2. Prepare a schedule that shows the computation of budgeted ending inventories (in units) for April, Ju May, June, and July. 3. Prepare the merchandise purchases budget for May, June, and July. Report calculations in units and then show the dollar amount of purchases for each month.