Prepare the merchandise purchases budget

Assignment Help Financial Accounting
Reference no: EM131216842

Aztec Company sells its product for $160 per unit. Its actual and projected sales follow. Units Dollars April (actual) 8,000 $1,280,000 May (actual) 1,800 288,000 June (budgeted) 6,500 1,040,000 July (budgeted) 7,000 1,120,000 August (budgeted) 3,600 576,000 All sales are on credit. Recent experience shows that 20% of credit sales is collected in the month of the sale, 50% in the month after the sale, 24% in the second month after the sale, and 6% proves to be uncollectible. The product’s purchase price is $110 per unit. All purchases are payable within 12 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 23% of the next month’s unit sales plus a safety stock of 95 units. The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,224,000 and are paid evenly throughout the year in cash. The company’s minimum cash balance at month-end is $110,000. This minimum is maintained, if necessary, by borrowing cash from the bank. If the balance exceeds $110,000, the company repays as much of the loan as it can without going below the minimum. This type of loan carries an annual 11% interest rate. On May 31, the loan balance is $48,000, and the company’s cash balance is $110,000. (Round final answers to the nearest whole dollar.)

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.

Prepare a table that shows the computation of budgeted ending inventories (in units) for April, May, June, and July.

Prepare the merchandise purchases budget for May, June, and July. Report calculations in units and then show the dollar amount of purchases for each month.

Prepare a table showing the computation of cash payments on product purchases for June and July.

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. (Do not round intermediate calculations.)

Reference no: EM131216842

Determine net income for its first year of operations

Stanton Corp. began operations on January 1, 2016. The statement of cash flows for the first year reported dividends paid of $221,000. The balance sheet at the end of the firs

What is the amount of the accounts receivable

After examination of the records of Edit Company, you determined the following year-end amounts:- What is the amount of the accounts receivable actually written off during 201

For foreign tax credit purpose

USAco, a domestic corporation, has a branch in Canada. The functional currency of the Canadian branch is the Canadian dollar (C$). The Canadian branch pays C$100,000 of Canadi

Determine the corrected amounts for cost of goods

Culver Enterprises reported cost of goods sold for 2017 of $1,515,400 and retained earnings of $4,687,300 at December 31, 2017. Culver later discovered that its ending invento

Decrease in market-wide interest rates will result

When a debt covenant is violated, the related debt must be classified as current if it is probable that the borrower: In a study of discretionary accounting accruals, it was f

What is balance of estimated warranty liability account

How much warranty expense is reported for January 2011? What is balance of the Estimated Warranty Liability account as of December 31, 2010?

Uses weighted average costing

Process Costing Tempe Manufacturing Company makes a single product that is produced on a continuous basis in one department. All materials are added at the beginning of produc

Which part of the preceding narrative fits the definition

James Burrow is the loan officer for the National Bank of Dallas. National has a loan of $325,000 outstanding to Regional Delivery Service, a company specializing in deliverin


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd