Aztec Company sells its product for $150 per unit. Its actual and budgeted sales follow. Sales units Sales dollars May (Actual) June (Budget) July (Budget) August (Budget) 2,800 6,000 5,000 4,200 $630,000 $ 420,000 $ 900,000 $ 750,000 All sales are on credit. Collections are as follows: 28% is collected in the month of the sale, and the remaining 72% 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 22% of the next month's unit sales. The May 31 actual inventory level of 1,320 units is consistent with this policy. Selling and administrative expenses of $166,000 per month are paid in cash. The company's minimum cash balance at month-end is $100,000. Loans are obtained at the end of any month when the preliminary cash balance is below $100,000. Any preliminary cash balance above $100,000 is used to repay loans at month-end. This loan has a 0.5% monthly interest rate. On May 31, the loan balance is $41,500, and the company's cash balance is $100,000. 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 $385,440. Prepare a cash budget for lune and July including any loan activity and interest expense Compute the loan balance at the end of
Aztec Company sells its product for $150 per unit. Its actual and budgeted sales follow. Sales units Sales dollars May (Actual) June (Budget) July (Budget) August (Budget) 2,800 6,000 5,000 4,200 $630,000 $ 420,000 $ 900,000 $ 750,000 All sales are on credit. Collections are as follows: 28% is collected in the month of the sale, and the remaining 72% 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 22% of the next month's unit sales. The May 31 actual inventory level of 1,320 units is consistent with this policy. Selling and administrative expenses of $166,000 per month are paid in cash. The company's minimum cash balance at month-end is $100,000. Loans are obtained at the end of any month when the preliminary cash balance is below $100,000. Any preliminary cash balance above $100,000 is used to repay loans at month-end. This loan has a 0.5% monthly interest rate. On May 31, the loan balance is $41,500, and the company's cash balance is $100,000. 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 $385,440. Prepare a cash budget for lune and July including any loan activity and interest expense Compute the loan balance at the end of
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Aztec Company sells its product for $150 per unit. Its actual and budgeted sales follow.
Sales units
Sales dollars
May (Actual) June (Budget) July (Budget) August (Budget)
2,800
6,000
5,000
4,200
$ 750,000
$ 630,000
$ 420,000
$ 900,000
All sales are on credit. Collections are as follows: 28% is collected in the month of the sale, and the remaining 72% 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 22% of
the next month's unit sales. The May 31 actual inventory level of 1,320 units is consistent with this policy. Selling and administrative
expenses of $166,000 per month are paid in cash. The company's minimum cash balance at month-end is $100,000. Loans are
obtained at the end of any month when the preliminary cash balance is below $100,000. Any preliminary cash balance above
$100,000 is used to repay loans at month-end. This loan has a 0.5% monthly interest rate. On May 31, the loan balance is $41,500, and
the company's cash balance is $100,000.
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 $385,440.
4. 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.
Required 1 Required 2
Required 3
Required 4
Prepare schedule of cash receipts from sales for each of the months of June and July.
AZTEC COMPANY
Schedule of Cash Receipts from Sales
May
June
900,000 $
July
750,000
Sales
$ 420,000 $
Cash receipts from:
Collections of current period sales
Collections of prior period sales
Total cash receipts
Required 2
>
< Required 1
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education