Aztec Company sells its product for $160 per unit. Its actual and budgeted sales follow. May (Actual) June (Budget) 2,480 6,808 $ 960,000 July (Budget) August (Budget) 5,000 $ 784,000 $ 384,000 $ 800,000 Sales units Sales dollars All sales are on credit. Collections are as follows: 26% is collected in the month of the sale, and the remaining 74% 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 21% of the next month's unit sales. The May 31 actual inventory level of 1,260 units is consistent with this policy. Selling and administrative expenses of $108,000 per month are paid in cash. The company's minimum cash balance at month-end is $120,000. Loans are obtained at the end of any month when the preliminary cash balance is below $120,000. Any preliminary cash balance above $120,000 is used to repay loans at month-end. This loan has a 1.0% monthly interest rate. On May 31, the loan balance is $42,500, and the company's cash balance is $120,000. 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 $347,160. 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.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...

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help completing this cash budget

Aztec Company sells its product for $160 per unit. Its actual and budgeted sales follow.
May (Actual) June (Budget)
2,488
6,808
960,000
July (Budget) August (Budget)
5,000
4,400
$ 800,000
$ 784,000
$ 384,000
$
Sales units
Sales dollars
All sales are on credit. Collections are as follows: 26% is collected in the month of the sale, and the remaining 74% 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 21% of
the next month's unit sales. The May 31 actual inventory level of 1,260 units is consistent with this policy. Selling and administrative
expenses of $108,000 per month are paid in cash. The company's minimum cash balance at month-end is $120,000. Loans are
obtained at the end of any month when the preliminary cash balance is below $120,000. Any preliminary cash balance above
$120,000 is used to repay loans at month-end. This loan has a 1.0% monthly interest rate. On May 31, the loan balance is $42,500, and
che company's cash balance is $120,000.
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 $347,160,
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
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. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round
your answers to the nearest whole dollars.)
Beginning cash balance
Total cash available
Less: Cash payments for:
Total cash payments
Preliminary cash balance
Ending cash balance
AZTEC COMPANY
Cash Budget
June and July
Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance - End of month
Required 4
$
Loan balance
June
Jun
< Required 3
0 S
July
July
0
0
Required 4 >

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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i am trying to go through and understand this question and how to do it but there are multiple values that my homework says are wrong and there is a line missing under interest expense. without the correct values for the ending table I will not be able to understand how to complete a cash budget like this

AZTEC COMPANY
Cash Budget
June and July
Beginning cash balance
Add: Cash receipts from sales
Total cash available
Less: Cash payments for:
Merchandise purchases
Selling and administrative expenses
Interest expense
Total cash payments
Preliminary cash balance
Additional loan (loan repayment)
Ending cash balance
$
Loan balance
Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance - End of month
$
69
June
120,000 $
533,760
653,760
521,004
108,000
4,250
633,254
20,506 X
99,494 X
120,000 $
June
42,500 $
99,494 X
141,994 $
July
120,000
918,400
1,038,400
576,444
108,000
14,199 X
698,643
339,756 X
(141,994)
197,762
July
141,994
(141,994)
0

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