Question

    UnitsDollars  April (actual)4,500      $765,000     May (actual)3,400      578,000     June (budgeted)7,000      1,190,000     July (budgeted)5,500      935,000     August (budgeted)3,900      663,000   
 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, 25% in the second month after the sale, and 5% 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 22% of the next month’s unit sales plus a safety stock of 130 units. The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,344,000 and are paid evenly throughout the year in cash. The company’s minimum cash balance at month-end is $130,000. This minimum is maintained, if necessary, by borrowing cash from the bank. If the balance exceeds $130,000, 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 $39,500, and the company’s cash balance is $130,000. (Round final answers to the nearest whole dollar.)rev: 11_19_2013_QC_40413, 10_21_2014_QC_56990
 1. value:2.30 points Required information   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.

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