Company sells its product for $170 per unit. Its actual andbudgeted sales follow. Units Dollars April (actual) 3,000 $ 510,000May (actual) 2,800 476,000 June (budgeted) 5,500 935,000 July(budgeted) 4,500 934,000 August (budgeted) 3,500 595,000 All salesare on credit. Recent experience shows that 26% of credit sales iscollected in the month of the sale, 44% in the month after thesale, 25% in the second month after the sale, and 5% proves to beuncollectible. The product’s purchase price is $110 per unit. 60%of purchases made in a month is paid in that month and the other40% is paid in the next month. The company has a policy to maintainan ending monthly inventory of 18% of the next month’s unit salesplus a safety stock of 85 units. The April 30 and May 31 actualinventory levels are consistent with this policy. Selling andadministrative expenses for the year are $1,320,000 and are paidevenly throughout the year in cash. The company’s minimum cashbalance at month-end is $100,000. This minimum is maintained, ifnecessary, by borrowing cash from the bank. If the balance exceeds$100,000, the company repays as much of the loan as it can withoutgoing below the minimum. This type of loan carries an annual 12%interest rate. On May 31, the loan balance is $36,000, and thecompany’s cash balance is $100,000. Required: 1. Prepare a schedulethat shows the computation of cash collections of its credit sales(accounts receivable) in each of the months of June and July. 2.Prepare a schedule that shows the computation of budgeted endinginventories (in units) for April, May, June, and July. 3. Preparethe merchandise purchases budget for May, June, and July. Reportcalculations in units and then show the dollar amount of purchasesfor each month. 4. Prepare a schedule showing the computation ofcash payments for product purchases for June and July. 5. Prepare acash budget for June and July, including any loan activity andinterest expense. Compute the loan balance at the end of eachmonth.

UnitsDollarsApril (actual)3,000$510,000May (actual)2,800476,000June (budgeted)5,500 935,000July (budgeted)4,500934,000August (budgeted)3,500 595,000