shows the computation of cash collections
| Units | Dollars | |
| April (actual) | 8,000 | $1,440,000 |
| May (actual) | 2,800 | 504,000 |
| June (budgeted) | 7,500 | 1,350,000 |
| July (budgeted) | 7,500 | 1,350,000 |
| August (budgeted) | 4,100 | 738,000 |
All 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, 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 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 21% of the next month’s unit sales plus a safety stock of 75 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 13% interest rate. On May 31, the loan balance is $31,000, and the company’s cash balance is $110,000. (Round final answers to the nearest whole dollar.)
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