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? 0 ? ??https://newconnect.mheducatiom?| ? ? ?? Help Save &Exit; Submit est #30 Aztec Company sells its product for $190 per unit. lts actual and budgeted sales follow. 3 4,800 s 760,800 3,000 April (actual) May (actual) une (budgeted)7,00 1,330,80 July (budgeted) 6,000 1,148,800 August (budgeted) 3,600 684,000 578,000 skipped All sales are on credit Recent experience shows that 26% of credit sales is ciected in the month of the sale, 44% 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 19% of the next month's unit sales plus a safety stock of 130 units. The Apr policy. Selling and administrative expenses for the year are $ 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 exceeds $110,000, the company repays as much of the loan as it can without going below the minimum. This type of loan carries anannual 13% interest rate on May 31, the loan balance is $33,500, l 30 and May 31 actual inventory levels are consistent with this 1,764,000 and are paid evenly the balance and the company's cash balance is $110.000. 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 Complete this question by entering your answers in the tabs below. Prev3 of 10Bl Next > O Type here to search
Explanation / Answer
Answer 1. Percent Collected in April May June July August Credit Sales From: April 26% 44% 28% May 26% 44% 28% June 26% 44% 28% July 26% 44% August 26% Amount Collected in Total April May June July August Credit Sales From: April 760,000.00 197,600.00 334,400.00 212,800.00 May 570,000.00 148,200.00 250,800.00 159,600.00 June 1,330,000.00 345,800.00 585,200.00 372,400.00 July 1,140,000.00 296,400.00 501,600.00 August 684,000.00 177,840.00 4,484,000.00 197,600.00 482,600.00 809,400.00 1,041,200.00 1,051,840.00 Answer 2. Budgeted Ending Inventory For April, May, June and July April May June July Next Month Budgeted sales (Units) 3,000.00 7,000.00 6,000.00 3,600.00 Ratio of inventory to Future Sales 19% 19% 19% 19% Budgeted "base" ending Inventory 130.00 130.00 130.00 130.00 Budgeted Ending Inventory 700.00 1,460.00 1,270.00 814.00 Answer 3. Mechandise Purchases Budgets For May, June and July May June July Sales in Units 4,000.00 3,000.00 7,000.00 Add: Closing Inventory 1,460.00 1,270.00 814.00 Required units of Available Mechandise 5,460.00 4,270.00 7,814.00 Less: Begnning Inventory (700.00) (1,460.00) (1,270.00) Required Purchases in Units 4,760.00 2,810.00 6,544.00 Purchase cost per Unit 110.00 110.00 110.00 Budgeted Purchase in $ 523,600.00 309,100.00 719,840.00 Answer 4. Cash Payments on Product Purchases for June & July Percent Paid in May June July From Purchases in May 60% 40% June 60% 40% July 60% Amount Collected in Total May June July From Purchases in: May 523,600.00 314,160.00 209,440.00 - June 309,100.00 185,460.00 123,640.00 July 719,840.00 431,904.00 1,552,540.00 314,160.00 394,900.00 555,544.00 Answer 5. Cash budget June July Total Opening cash Balance 110,000 343,274 110,000 Add: receipts Collection from Customers 809,400 1,041,200 1,850,600 Total Cash available 919,400 1,384,474 1,960,600 Less: Disbursements Cash Disbursement - Accounts Payable 394,900 555,544 950,444 Selling & Admn. Exp. 147,000 147,000 294,000 Total Disbursement 541,900 702,544 1,244,444 Cash Balance Closing 377,500 681,930 716,156 Add: Finance from Bank - - - Less: Payment to Bank (33,500) (33,500) Less: Payment of interet - Bank loan (726) (726) Net Cash Balance Closing 343,274 681,930 681,930
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