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.
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.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
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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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Transcribed Image Text:Aztec Company sells its product for $150 per unit. Its actual and budgeted sales follow.
May (Actual) June (Budget) July (Budget) August (Budget)
4,000
$ 600,000
2,200
5,000
4,100
$ 330,000
$ 750,000
$ 615,000
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 is $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.
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 a schedule of cash receipts from sales for each of the months of June and July,
AZTEC COMPANY
Schedule of Cash Receipts from Sales
May
Sales
Cash receipts from:
Collections of current period sales
Collections of prior period sales
Total cash receipts
$
330,000 $
$
June
750,000 $
0 $
July
600,000
0
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