1. value: 2.30 points Homework 7 instructions | help [The following information applies to the questions displayed below.] Aztec Company sells its product for $200 per unit. Its actual and projected sales follow. Units Dollars April (actual) 8,500 $1,700,000 May (actual) 2,600 520,000 June (budgeted) 6,500 1,300,000 July (budgeted) 6,000 1,200,000 August (budgeted) 4,300 860,000 All sales are on credit. Recent experience shows that 30% of credit sales is collected in the month of the sale, 40% in the month after the sale, 26% in the second month after the sale, and 4% proves to be uncollectible. The product’s purchase price is $110 per unit. All purchases are payable within 15 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 25% of the next month’s unit sales plus a safety stock of 170 units. The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,416,000 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 10% interest rate. On May 31, the loan balance is $48,000, and the company’s cash balance is $110,000. rev: 11_19_2013_QC_40413 Required: 1. 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 August Credit sales from: April May June July August Amount Collected in Total April May June July August Credit sales from: April 1,700,000 May 520,000 June 1,300,000 July 1,200,000 August 860,000 check my work references Aja JacksonBMAL 530: 2014 Summer B 2 Homework 7 http://ezto.mhecloud.mcgraw-hill.com/hm.tpx?_=0.4019491558784636_... 1 of 4 6/26/2014 10:00 PM Administrator Highlight Administrator Highlight Administrator Highlight Administrator Highlight Administrator Highlight 2. value: 2.30 points 3. value: 2.30 points 4. value: 2.30 points 2. Prepare a table that shows 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 July Next month's budgeted sales (units) Ratio of inventory to future sales Budgeted "base" ending inventory check my work references 3. 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. AZTEC COMPANY Merchandise Purchases Budgets For Ma ...

1. 1. value:
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Homework 7 instructions | help
[The following information applies to the questions displayed
below.]
Aztec Company sells its product for $200 per unit. Its actual
and projected sales follow.
Units Dollars
April (actual) 8,500 $1,700,000
May (actual) 2,600 520,000
June (budgeted) 6,500 1,300,000
July (budgeted) 6,000 1,200,000
August (budgeted) 4,300 860,000
All sales are on credit. Recent experience shows that 30% of
credit sales is collected in the month of the
sale, 40% in the month after the sale, 26% in the second month
after the sale, and 4% proves to be
uncollectible. The product’s purchase price is $110 per unit.
All purchases are payable within 15 days.
Thus, 60% of purchases made in a month is paid in that month
and the other 40% is paid in the next

2. month. The company has a policy to maintain an ending
monthly inventory of 25% of the next month’s unit
sales plus a safety stock of 170 units. The April 30 and May 31
actual inventory levels are consistent with
this policy. Selling and administrative expenses for the
year are $1,416,000 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 10% interest rate. On May 31, the loan
balance is $48,000, and the company’s cash
balance is $110,000.
rev: 11_19_2013_QC_40413
Required:
1. 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 August
Credit sales
from:
April

3. May
June
July
August
Amount Collected in
Total April May June July August
Credit sales
from:
April 1,700,000
May 520,000
June 1,300,000
July 1,200,000
August 860,000
check my work references
Aja JacksonBMAL 530: 2014 Summer B 2
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2. value:
2.30 points
3. value:
2.30 points
4. value:
2.30 points
2. Prepare a table that shows the computation of budgeted
ending inventories (in units) for April, May,
June, and July.
AZTEC COMPANY

5. Budgeted Ending Inventory
For April, May, June and July
April May June July
Next month's budgeted sales (units)
Ratio of inventory to future sales
Budgeted "base" ending inventory
check my work references
3. 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.
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

6. check my work references
4. Prepare a table showing the computation of cash payments on
product purchases for June and July.
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Cash payments on product purchases (for June and July)
------------------ Percent Paid in---------------
May June July
From purchases in:
May
June
July

7. ------------------ Amount Paid in---------------
Total May June July
From purchases in:
May
June
July
check my work references
5. 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.)
AZTEC COMPANY
Cash Budget
June and July
June July
Beginning cash balance
Total cash available
Cash disbursements:

8. Total cash disbursements
Preliminary cash balance
Ending cash balance
Loan balance
June July
Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance - End of month
rev: 11_19_2013_QC_40413
check my work references
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[The following information applies to the questions displayed
below.]
Near the end of 2013, the management of Dimsdale Sports Co.,
a merchandising company, prepared the
following estimated balance sheet for December 31, 2013.
DIMSDALE SPORTS COMPANY
Estimated Balance Sheet
December 31, 2013
Assets
Cash $ 36,500
Accounts receivable 520,000
Inventory 105,000
Total current assets 661,500
Equipment $ 545,000
Less accumulated depreciation 68,125
Equipment, net 476,875

10. Total assets $ 1,138,375
Liabilities and Equity
Accounts payable $ 370,000
Bank loan payable 14,000
Taxes payable (due 3/15/2014) 90,000
Total liabilities $ 474,000
Common stock 471,000
Retained earnings 193,375
Total stockholders’ equity 664,375
Total liabilities and equity $ 1,138,375
To prepare a master budget for January, February, and March of
2014, management gathers the following
information.
a. Dimsdale Sports’ single product is purchased for $20 per
unit and resold for $53 per unit. The
expected inventory level of 5,250 units on December 31, 2013,
is more than management’s desired
level for 2014, which is 20% of the next month’s expected sales
(in units). Expected sales are: January,
7,250 units; February, 9,250 units; March, 10,500 units; and
April, 10,000 units.
b. Cash sales and credit sales represent 20% and 80%,
respectively, of total sales. Of the credit sales,

11. 63% is collected in the first month after the month of sale and
37% in the second month after the
month of sale. For the December 31, 2013, accounts
receivable balance, $130,000 is collected in
January and the remaining $390,000 is collected in February.
c. Merchandise purchases are paid for as follows: 20% in the
first month after the month of purchase and
80% in the second month after the month of purchase. For the
December 31, 2013, accounts payable
balance, $75,000 is paid in January and the remaining $295,000
is paid in February.
d. Sales commissions equal to 20% of sales are paid each
month. Sales salaries (excluding commissions)
are $72,000 per year.
e. General and administrative salaries are $132,000 per year.
Maintenance expense equals $2,100 per
month and is paid in cash.
f. Equipment reported in the December 31, 2013, balance sheet
was purchased in January 2013. It is
being depreciated over eight years under the straight-line
method with no salvage value. The following
amounts for new equipment purchases are planned in the
coming quarter: January, $36,000; February,
$95,000; and March, $29,000. This equipment will be
depreciated under the straight-line method over
eight years with no salvage value. A full month’s depreciation
is taken for the month in which equipment
is purchased.
g. The company plans to acquire land at the end of March at a
cost of $155,000, which will be paid with
cash on the last day of the month.

12. h. Dimsdale Sports has a working arrangement with its bank to
obtain additional loans as needed. The
interest rate is 12% per year, and interest is paid at each month-
end based on the beginning balance.
Partial or full payments on these loans can be made on the last
day of the month. The company has
agreed to maintain a minimum ending cash balance of $22,260
in each month.
i. The income tax rate for the company is 37%. Income taxes on
the first quarter’s income will not be
paid until April 15.
Required:
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6. value:
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7. value:
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8. value:
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Prepare a master budget for each of the first three months of
2014; include the following component
budgets:
rev: 04_30_2014_QC_49073
1. Monthly sales budgets.
DIMSDALE SPORTS CO.

14. Sales Budget
For January, February, and March, 2014
Budgeted
Unit Sales
Budgeted
Unit Price
Budgeted
Total Dollars
January
February
March
Totals for the quarter
check my work references
2. Monthly merchandise purchases budgets.
DIMSDALE SPORTS CO.
Merchandise Purchases Budget

15. January, February, and March 2014
January February March
Next month's budgeted sales (units) 9,250 10,500 10,000
Ratio of inventory to future sales 20% 20% 20%
Required units of available merchandise
Units to be purchased
check my work references
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9. value:
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10. value:
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3. Monthly selling expense budgets.

16. DIMSDALE SPORTS COMPANY
Selling Expense Budget
January, February, and March 2014
January February March
Budgeted sales
Sales commissions
check my work references
4. Monthly general and administrative expense budgets.
$
January February March
Equipment - beginning of month 545,000
Equipment purchases
Equipment - end of month
DIMSDALE SPORTS CO.
General and Administrative Expense Budget
January, February, and March 2014
January February March

17. rev: 04_30_2014_QC_49073
check my work references
5. Monthly capital expenditures budgets.
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DIMSDALE SPORTS COMPANY
Capital Expenditures Budget
January, February, and March 2014
January February March
Total
check my work references

18. 6. Monthly cash budgets.
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DIMSDALE SPORTS CO.
Cash Budget
January, February, and March 2014
January February March
Beginning cash balance
Total cash available
Cash disbursements:
Total cash disbursements
Preliminary cash balance
Ending cash balance
Loan balance
January February March

19. Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance - End of month
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$ $ $
$
$ $ $
$
Calculation of Cash receipts from customers:
January February March
Sales in units
Selling price per unit
Total budgeted sales
Cash sales 20%

20. Sales on credit 80%
------------------Collected in-------------- March 31
Total January February March Receivable
Accounts Receivable - January
1
520,000 130,000 390,000
Credit sales from:
January
February 0
March 0
Total collection of receivables 130,000
Total cash receipts from customers
January February March
Collections of receivables
Calculation of payments for merchandise:
January February March
Desired ending inventory (units)
Budgeted sales in units

21. Total units required
Beginning inventory (units)
Number of units to be purchased
Cost per unit
Total cost of purchases
----------------Paid in--------------- March 31
Total January February March Payable
Accounts Payable - January 1 370,000 75,000 295,000
Merchandise purchases in:
January
February
March
Total cash paid for merchandise 75,000
rev: 01_20_2014_QC_43790
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12. value:
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13. value:
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7. Budgeted income statement for the entire first quarter (not
for each month).
DIMSDALE SPORTS CO.
Budgeted Income Statement
For Three Months Ended March 31, 2014
check my work references
8. Budgeted balance sheet as of March 31, 2014.
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23. DIMSDALE SPORTS CO.
Budgeted Balance Sheet
March 31, 2014
Assets
Liabilities and Equity
Liabilities
Bank loan payable
Stockholders' Equity
check my work references
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