Aztec Company sells its product for $160 per unit. Its actual and budgeted sales follow.
Units | Dollars | ||
April (actual) | 5,000 | $ | 800,000 |
May (actual) | 2,000 | 320,000 | |
June (budgeted) | 5,500 | 880,000 | |
July (budgeted) | 4,500 | 879,000 | |
August (budgeted) | 4,000 | 640,000 | |
All sales are on credit. Recent experience shows that 26% of
credit sales is collected in the month of the sale, 44% in the
month after the sale, 26% in the second month after the sale, and
4% 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 24% of the next
month’s unit sales plus a safety stock of 95 units. The April 30
and May 31 actual inventory levels are consistent with this policy.
Selling and administrative expenses for the year are $1,440,000 and
are paid evenly 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 the balance
exceeds $110,000, the company repays as much of the loan as it can
without going below the minimum. This type of loan carries an
annual 11% interest rate. On May 31, the loan balance is $44,500,
and the company’s cash balance is $110,000.
Required:
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.
Required 4
Complete this question by entering your answers in the tabs below.
Prepare a schedule showing the computation of cash payments for product purchases for June and July.
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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. (Do not round intermediate calculations. Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar value.)
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Computation of Cash receipts from sales | ||||||
Percent Collected in | ||||||
April | May | June | July | August | ||
Credits sales from: | ||||||
April | 26% | 44% | 26% | |||
May | 26% | 44% | 26% | |||
June | 26% | 44% | 26% | |||
July | 26% | 44% | ||||
August | 26% | |||||
Computation of Cash receipts from sales | ||||||
Amount Collected in | ||||||
Total | April | May | June | July | August | |
Credits sales from: | ||||||
April | $7,68,000 | $2,08,000 | $3,52,000 | $2,08,000 | ||
May | $3,07,200 | $83,200 | $1,40,800 | $83,200 | ||
June | $8,44,800 | $2,28,800 | $3,87,200 | $2,28,800 | ||
July | $6,15,300 | $2,28,540 | $3,86,760 | |||
August | $1,66,400 | $1,66,400 | ||||
Totals | $2,08,000 | $4,35,200 | $5,77,600 | $6,98,940 | $7,81,960 | |
Aztec Company | ||||||
Budgeted Ending Inventory | ||||||
April | May | June | July | |||
Next month's Budgeted sales (units) | 2000 | 5500 | 4500 | 4000 | ||
Ratio of inventory to Future sales (percent) | 24% | 24% | 24% | 24% | ||
Budgeted "base" ending inventory | 480 | 1320 | 1080 | 960 | ||
Safety Stock | 95 | 95 | 95 | 95 | ||
Budgeted Ending Inventory | 575 | 1415 | 1175 | 1055 | ||
Aztec Company | ||||||
Merchandise Purchase Budget | ||||||
May | June | July | ||||
Budgeted Ending Inventory | 1415 | 1175 | 1055 | |||
Add: Budgeted sales units | 2000 | 5500 | 4500 | |||
Required units of available merchandise | 3415 | 6675 | 5555 | |||
Less: Beginning Inventory | 575 | 1415 | 1175 | |||
Budgeted purchases (Units) | 2840 | 5260 | 4380 | |||
Budgeted Cost per unit | $110 | $110 | $110 | |||
Budgeted cost of merchandise purchases | $3,12,400 | $5,78,600 | $4,81,800 | |||
Cash payment on product purchases (for June and July) | ||||||
Percent paid in | ||||||
May | June | July | ||||
For Purchases in: | ||||||
May | 60% | 40% | ||||
June | 60% | 40% | ||||
July | 60% | |||||
Amount paid in | ||||||
Total | May | June | July | |||
For Purchases in: | ||||||
May | $3,12,400 | $1,87,440 | $1,24,960 | |||
June | $5,78,600 | $3,47,160 | $2,31,440 | |||
July | $2,89,080 | $2,89,080 | ||||
Totals | $1,87,440 | $4,72,120 | $5,20,520 | |||
Aztec Company | ||||||
Cash Budget | ||||||
June and July | ||||||
June | July | |||||
Beginning cash balance | $1,10,000 | $1,10,000 | ||||
Cash receipts from sales | $5,77,600 | $6,98,940 | ||||
Total Cash available | $6,87,600 | $8,08,940 | ||||
Cash disbursements: | ||||||
Payment for purchases | $4,72,120 | $5,20,520 | ||||
Selling and administrative expenses | $1,20,000 | $1,20,000 | ||||
Interest expense | $408 | 545 | ||||
Total Cash disbursements | $5,92,528 | $6,41,065 | ||||
Preliminary cash balance | $95,072 | $1,67,875 | ||||
Additional Loan (Loan repayment) | $14,928 | -$57,875 | ||||
Ending cash Balance | $1,10,000 | $1,10,000 | ||||
Loan Balance | ||||||
June | July | |||||
Loan Balance- Beginning of month | $44,500 | $59,428 | ||||
Additional Loan (Loan repayment) | $14,928 | -$57,875 | ||||
Loan Balance- End of month | $59,428 | $1,553 |
Aztec Company sells its product for $160 per unit. Its actual and budgeted sales follow. Units...
Aztec Company sells its product for $150 per unit. Its actual and budgeted sales follow. Units Dollars April (actual) 4,500 $ 675,000 May (actual) 2,600 390,000 June (budgeted) 6,000 900,000 July (budgeted) 5,000 899,000 August (budgeted) 4,200 630,000 All sales are on credit. Recent experience shows that 30% of credit sales is collected in the month of the sale, 40% in the month after the sale, 26% in the second month after the sale, and 4% proves to be uncollectible....
Aztec Company sells its product for $160 per unit. Its actual and budgeted sales follow. Units Dollars April (actual) 5,000 $ 800,000 May (actual) 2,000 320,000 June (budgeted) 5,500 880,000 July (budgeted) 4,500 879,000 August (budgeted) 4,000 640,000 All sales are on credit. Recent experience shows that 26% of credit sales is collected in the month of the sale, 44% in the month after the sale, 26% in the second month after the sale, and 4% proves to be uncollectible....
Aztec Company sells its product for $160 per unit. Its actual and budgeted sales follow. Units Dollars April (actual) 5,000 $ 800,000 May (actual) 2,000 320,000 June (budgeted) 5,500 880,000 July (budgeted) 4,500 879,000 August (budgeted) 4,000 640,000 All sales are on credit. Recent experience shows that 26% of credit sales is collected in the month of the sale, 44% in the month after the sale, 26% in the second month after the sale, and 4% proves to be uncollectible....
Aztec Company sells its product for $170 per unit. Its actual and budgeted sales follow. Units Dollars April (actual) 4,500 $ 765,000 May (actual) 2,000 340,000 June (budgeted) 6,000 1,020,000 July (budgeted) 5,000 1,019,000 August (budgeted) 3,600 612,000 All sales are on credit. Recent experience shows that 24% of credit sales is collected in the month of the sale, 46% in the month after the sale, 25% in the second month after the sale, and 5% proves to be uncollectible....
Aztec Company sells its product for $160 per unit. Its actual and budgeted sales follow. Units Dollars April (actual) 3,500 $ 560,000 May (actual) 2,800 448,000 June (budgeted) 4,500 720,000 July (budgeted) 3,500 719,000 August (budgeted) 3,700 592,000 All sales are on credit. Recent experience shows that 24% of credit sales is collected in the month of the sale, 46% in the month after the sale, 28% in the second month after the sale, and 2% proves to be uncollectible....
Aztec Company sells its product for $160 per unit. Its actual and budgeted sales follow. Units Dollars April (actual) 3,500 $ 560,000 May (actual) 2,000 320,000 June (budgeted) 5,000 800,000 July (budgeted) 4,000 799,000 August (budgeted) 4,400 704,000 All sales are on credit. Recent experience shows that 24% of credit sales is collected in the month of the sale, 46% in the month after the sale, 24% in the second month after the sale, and 6% proves to be uncollectible....
Aztec Company sells its product for $160 per unit. Its actual and budgeted sales follow. Units Dollars April (actual) 4,000 $ 640,000 May (actual) 2,000 320,000 June (budgeted) 5,000 800,000 July (budgeted) 4,000 799,000 August (budgeted) 4,000 640,000 All sales are on credit. Recent experience shows that 26% of credit sales is collected in the month of the sale, 44% in the month after the sale, 26% in the second month after the sale, and 4% proves to be uncollectible....
Aztec Company sells its product for $160 per unit. Its actual and budgeted sales follow. Units Dollars April (actual) 4,000 $ 640,000 May (actual) 2,200 352,000 June (budgeted) 4,500 720,000 July (budgeted) 3,500 719,000 August (budgeted) 3,600 576,000 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....
Help Aztec Company sells its product for $160 per unit. Its actual and budgeted sales follow April (actual) May (actual) June (budgeted) July (budgeted) August (budgeted) 4,000 2.000 5.000 4.000 4,000 Dollars $ 640,000 320,000 800,000 799,000 640,000 All sales are on credit. Recent experience shows that 26% of credit sales is collected in the month of the sale, 44% in the month after the sale, 26% in the second month after the sale, and 4% proves to be uncollectible....
Aztec Company sells its product for $190 per unit. Its actual and budgeted sales follow. Units Dollars April (actual) 8,000 $1,520,000 May (actual) 2,600 494,000 June (budgeted) 7,500 1,425,000 July (budgeted) 8,000 1,520,000 August (budgeted) 4,000 760,000 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...