Kasik Co. budgeted the following cash receipts and cash disbursements for the fi
ID: 2374870 • Letter: K
Question
Kasik Co. budgeted the following cash receipts and cash disbursements for the first three months of next year:
According to a credit agreement with the company%u2019s bank, Kasik promises to have a minimum cash balance of $30,000 at each month-end. In return, the bank has agreed that the company can borrow up to $150,000 at an annual interest rate of 12%, paid on the last day of each month. The interest is computed based on the beginning balance of the loan for the month. The company has a cash balance of $30,000 and a loan balance of $60,000 at January 1.
Prepare monthly cash budgets for each of the first three months of next year.
How was the march beginning balance calculated?
Cash
Receipts Cash
Disbursements January $ 500,000 $ 450,000 February 300,000 250,000 March 400,000 500,000
Explanation / Answer
JAN FEB MARCH ============================================================================================================================== Beginning cash 30 000 30 000 69294 ============================================================================================================================================================================================= Cash receipts 500 000 300 000 400 000 ==============================================================================================================================toatl 530 000 330 000 469294 ==============================================================================================================================CASH DIsbursement 450 000 250 000 500 000 ==============================================================================================================================interest ==============================================================================================================================january 600 ==============================================================================================================================feb 106 ==============================================================================================================================Cash balance 79400 79894 30706 ==============================================================================================================================additional 60706 ==============================================================================================================================repayment 49400 10600 ==============================================================================================================================Ending cash balance 30000 69294 30 000
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