Problem 7-7AA Merchandising: Preparation and analysis of cash budgets with supporting inventory and purchases budgets LO P4 IThe following information applies to the questions displeyed below) Aztec Compony sells its product for $190 per unit ts actuel and budgeted soles follow April (odtuol) May lectuah June bucgetect July budgetec August budgeted 5.000 $950.000 3.000 8.000 1520000 6.000 4000 570000 1140 000 760.000 All sales are on creat Recent experience shows that 26% of geat sales it colleaed in the month of the sale. 44% in the month ofter the sale, 25% in the second month ster the sale, end 5% proves to be uncolleate The produas purchase price is $110 per unit All poses are payable within 14 days Thus 0% d prdeses moce in o month Is pid in that month end the corer 40% is pod in the next month The company has o picy to mortar on encing monthly inventory of 23% of the next month's unit sales plus a safety stock of 165 units The April 30 and May 31 aqual inventary levels ore consistent with this pcy Seling and admnistrative expenses for the yeor are $1.284000 and ere paid evenly throughour the year in cosh The campeny's minimum cash balance at month-end is $110,000. This minimum is meintainedt If necessary by borrowing cesh from the benk in the belance exceeds $110.000, the company repays as much of the loan os it con without going below the m nimm This type loan carries an annual 12% trterest rate On May 31, the loan balance is $42.000, end the compeny's cosh bslance is $110.000 References