## Aztec Company Financial Planning OverviewAztec Company sells its product for $150 per unit. Below are the actual and budgeted sales figures:### Sales Units and Dollars| Month | May (Actual) | June (Budget) | July (Budget) | August (Budget) ||--------------|--------------|---------------|---------------|-----------------|| Sales units | 2,200 | 5,000 | 4,000 | 4,100 || Sales dollars| $330,000 | $750,000 | $600,000 | $615,000 |### Sales Collection Policy- All sales are on credit.- 22% of the sales are collected in the month of sale.- The remaining 78% is collected in the following month.### Merchandise Purchases and Inventory Policy- Merchandise purchases cost $110 per unit.- 60% of these purchases are paid in the month of purchase, while the remaining 40% is paid in the following month.- The company maintains an ending monthly inventory of 24% of the next month’s unit sales.- The May 31 actual inventory level of 1,200 units is consistent with this policy.### Expenses and Cash Management- Selling and administrative expenses total $155,000 per month and are paid in cash.- The minimum required cash balance at month-end is $110,000.- Loans are obtained when the preliminary cash balance is below this threshold. Any surplus is used to repay loans. Loans have a 1.5% monthly interest rate.### Financial Tasks1. **Schedule of Cash Receipts:** - Calculate for June and July.2. **Merchandise Purchases Budget:** - Plan for June and July.3. **Cash Payments for Purchases:** - Assume May’s budgeted purchases are $315,920.4. **Cash Budget:** - Account for June and July including loan activity and interest expenses. - Determine the loan balance at month-end.### Tabulated Details (Schedule of Cash Receipts from Sales)#### Schedule of Cash Receipts from Sales| Month | May | June | July ||-------|--------------|-------------|-----------|| Sales | $330,000 | $750,000 | $600,000 || **Cash receipts from** | | | || - Collections

“Since you have posted multiple questions with multiple sub parts, we will provide the solution only…

Aztec Company sells its product for $150 per unit. Its actual and budgeted sales follow. May (Actual) June (Budget) July (Budget) August (Budget) 2,200 5,000 4,000 4,100 $ 330,000 $ 600,000 $ 615,000 $ 750,000 Sales units Sales dollars. All sales are on credit. Collections are as follows: 22% is collected in the month of the sale, and the remaining 78% is collected in the month following the sale. Merchandise purchases cost $110 per unit. For those purchases, 60% is paid in the month of purchase and the other 40% is paid in the month following purchase. The company has a policy to maintain an ending monthly inventory of 24% of the next month's unit sales. The May 31 actual inventory level of 1,200 units is consistent with this policy. Selling and administrative expenses of $155,000 per month are paid in cash. The company's minimum cash balance at month-end $110,000. Loans are obtained at the end of any month when the preliminary cash balance is below $110,000. Any preliminary cash balance above $110,000 is used to repay loans at month-end. This loan has a 1.5% monthly interest rate. On May 31, the loan balance is $46,500, and the company's cash balance is $110,000. Required: 1. Prepare a schedule of cash receipts from sales for each of the months of June and July. 2. Prepare the merchandise purchases budget for June and July. 3. Prepare a schedule of cash payments for merchandise purchases for June and July. Assume May's budgeted merchandise purchases is $315,920.

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 2CMA