problem 20 3a merchandising preparation and analysis of cash budgets with supporting 4527163

Problem 20-3A Merchandising: Preparation and analysis of cash budgets with supporting inventory and purchases budgets LO C2, P2.Aztec Company sells its product for $170 per unit. Its actual and projected sales follow. Units DollarsApril (actual) 9,500 $1,615,000May (actual) 2,400 408,000June (budgeted) 7,000 1,190,000July (budgeted) 8,000 1,360,000August (budgeted) 4,100 697,000All 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, 29% in the second month after the sale, and 1% proves to be uncollectible. The product’s purchase price is $110 per unit. All purchases are payable within 11 days. Thus, 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 18% of the next month’s unit sales plus a safety stock of 195 units. The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,716,000 and are paid evenly throughout the year in cash. The company’s minimum cash balance at month-end is $120,000. This minimum is maintained, if necessary, by borrowing cash from the bank. If the balance exceeds $120,000, the company repays as much of the loan as it can without going below the minimum. This type of loan carries an annual 12% interest rate. On May 31, the loan balance is $30,500 and the company’s cash balance is $120,000. (Round final answers to the nearest whole dollar.)1. Problem 20-3A Part 11. Prepare a table that shows the computation of cash collections of its credit sales (accounts receivable) in each of the months of June and July. Percent Collected in April May June July AugustCredit sales from:April _____________________________________________________________________May ______________________________________________________________________June ______________________________________________________________________July ______________________________________________________________________August _______________________________________________________________________ Amount Collected in Total April May June July AugustCredit sales from:April $ 1,615,000 _____________________________________________________________________May 408,000 ____________________________________________________________________June 1,190,000 ____________________________________________________________________July 1,360,000 ____________________________________________________________________August 697,000____________________________________________________________________ ___________________________________________________________________2. Problem 20-3A Part 22. Prepare a table that show the computation of budgeted ending inventories (in units) for April, May, June and July. AZTEC COMPANY Budgeted Ending Inventory For April, May, June and July April May June JulyNextmonth’s budgeted sales (units)_____________________________________________________Ratio of inventory to future sales ______________________________________________________Budgeted “base” ending inventory______________________________________________________________ __________________________________________________________ ___________________________________________________________3. Problem 20-3A Part 33. Prepare the merchandise purchases budget for May, June, and July. Report calculations in units and then show the dollar amount ofpurchases for each month. AZTEC COMPANY Merchandise Purchases Budgets For May, June, and July May June July______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Required units of available merchandise____________________________________________________________________________________________________________________________________________________________________________________________________Budgeted purchases (units)____________________________________________________________________________________________________________________________________________________________________________________________________________________Budgeted cost of merchandise purchases___________________________________________________________________________4. Problem 20-3A Part 44. Prepare a table showing the computation of cash payments on product purchases for June and July. Cash payment on product purchases (for June and July) ———————–Percent Paid in———————- May June JulyFrom purchases in:__________________________________________________________________________May___________________________________________________________________________________________June___________________________________________________________________________________________July_____________________________________________________________________________________________ ———————Amount Paid in————————- Total May June JulyFrom purchases in:May____________________________________________________________________________________________June___________________________________________________________________________________________July___________________________________________________________________________________________________________________________________________________________________________________________

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