Problem 22-7AA Merchandising: Preparation and analysis of cash budgets with supporting inventory and purchases budgets LO P4 Aztec Company sells Its product for $160 per unit. Its actual and budgeted sales follow Units Dollars April (actual) May (actual) June (budgeted) July (budgeted) August (budgeted) 4,588 72e,8e8 2,288 5,8e8 4,888 3,808 352,8e8 88e,888 799,808 688,8e8 All sales are on credit. Recent experience shows that 28% of credit sales is collected in the month of the sale, 42% 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 18% of the next month's unit sales plus a safety stock of 180 units. The April 30 and May 31 actual Inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,584,000 and are pald evenly throughout the year In cash. The company's minlmum cash balance at month-end is $120,000. This minimum is malntalned, 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 13% interest rate. On May 31, the loan balance is $39,500, and the company's cash balance Is $120,000 Requlred 1. Prepare a schedule that shows the computation of cash collections of Its credit sales (accounts recelvable) In each of the months of June and July 2. Prepare a schedule that shows the computation of budgeted ending Inventorles (in units) for April, 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. 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