Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

your help is needed. thanks Aztec Company sells its product for $150 per unit. Its actual and budgeted sales follow. _ {Initi- Dollars- Apr'il (actual)

your help is needed. thanks

image text in transcribed
Aztec Company sells its product for $150 per unit. Its actual and budgeted sales follow. _ {Initi- Dollars- Apr'il (actual) 5,869 $ 758,889 May (actual) 3,863 458,863 June (budgeted) 4, 569 675, 880 July (budgeted) 3,503 574, 866 August (budgeted) 3,?69 555,860 All sales are on credit Recent experience shows that 22% of credit sales is collected in the month of the sale, 48% in the month after the sale, 26% in the second month alter the sale, and 4% proves to be uncoilectihle. 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 23% of the next month's unit saies plus a safety stock of 150 units. The April 30 and May 31 actual inventory levels are consisterlt with this policy. Selling and administrative expenses for the year are $1,416,000 and are paid evenly throughout the year in cash. The company's minimum cash balance at month-end is $130,000. This minimum is maintained, if necessary, by borrowing cash from the bank. If the balance exceeds $130,000, the company repays as much of the loan as it can without going below the minimum. This type of loan carries an annuai14% interest rate. On May 31, the loan balance is $30,500, and the company's cash balance is $130,000. Required: 1. Prepare 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. Prepare a schedule that shows the computation of budgeted ending inventories (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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Fundamentals

Authors: John Wild

4th Edition

0078025591, 9780078025594

More Books

Students also viewed these Accounting questions

Question

2. The purpose of the acquisition of the information.

Answered: 1 week ago

Question

1. What is the meaning of the information we are collecting?

Answered: 1 week ago