You (Steven Rohrbacher) are a relatively recent hire to the Hartz & Co., a local

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You (Steven Rohrbacher) are a relatively recent hire to the Hartz & Co., a local manufacturer of plumbing supply products. You have been asked to prepare for a presentation to the company’s management a condensed cash-flow statement for the months of November and December, 2013. The cash balance at November 1st was $38,700. It is the company’s policy to maintain a minimum cash balance of $38,700 at the end of each month. Cash receipts (from cash sales and collection of accounts receivable) are projected to be $484,400 for November and $403,000 for December. Cash disbursements (sales commissions, advertising, delivery expense, wages, utilities, etc.), prior to financing activity, are scheduled to be $467,000 in November and $431,300 in December. Borrowing, when needed, is done at the beginning of the month - in increments of $900. The annual interest rate on any such loans is estimated to be 11.00%. Interest on any outstanding loans is paid in cash at the end of the month. Interest on any outstanding loans is paid in cash at the end of the month. Repayments of principal (if any) are assumed to occur at the end of the month. As of November 1st, the company has a $38,700 short-term loan from the local bank. Required:   Use the preceding information to prepare the cash budget for November and December. Data Input: Cash balance, November 1st $38,700 Minimum required cash balance $38,700 Budgeted cash receipts: November $484,400 December $403,000 Budgeted cash disbursements: November $467,000 December $431,300 Interest rate on borrowings 11.0% per year Short-term loan payable, as of November 1st $38,700 Borrowings in increments of $900 Solution: Cash Budget For November and December, 2013 November December Cash balance, beginning $38,700 0 Plus: Cash receipts $484,400 $403,000 Total Cash Available $523,100 $403,000 Cash disbursements, prior to financing $467,000 $431,300 Plus: Minimum cash balance (given) $38,700 $38,700 Total Cash Needed $505,700 $470,000 Excess (deficiency of) cash, before financing effects $17,400 -$67,000 Financing: Balance Short term loan beginning of month $38,700 Short-term borrowing, beginning of the month 0 Repayments (loan principal), end of the month 38700 Balance Short term loan end of month Interest (@11.00%), paid in cash @ end of the month Total effects of financing Ending cash balance Most of the points are on cells I39, I40 and L39, L40 You (Steven Rohrbacher) are a relatively recent hire to the Hartz & Co., a local manufacturer of plumbing supply products. You have been asked to prepare for a presentation to the company’s management a condensed cash-flow statement for the months of November and December, 2013. The cash balance at November 1st was $38,700. It is the company’s policy to maintain a minimum cash balance of $38,700 at the end of each month. Cash receipts (from cash sales and collection of accounts receivable) are projected to be $484,400 for November and $403,000 for December. Cash disbursements (sales commissions, advertising, delivery expense, wages, utilities, etc.), prior to financing activity, are scheduled to be $467,000 in November and $431,300 in December. Borrowing, when needed, is done at the beginning of the month - in increments of $900. The annual interest rate on any such loans is estimated to be 11.00%. Interest on any outstanding loans is paid in cash at the end of the month. Interest on any outstanding loans is paid in cash at the end of the month. Repayments of principal (if any) are assumed to occur at the end of the month. As of November 1st, the company has a $38,700 short-term loan from the local bank. Required:   Use the preceding information to prepare the cash budget for November and December. Data Input: Cash balance, November 1st $38,700 Minimum required cash balance $38,700 Budgeted cash receipts: November $484,400 December $403,000 Budgeted cash disbursements: November $467,000 December $431,300 Interest rate on borrowings 11.0% per year Short-term loan payable, as of November 1st $38,700 Borrowings in increments of $900 Solution: Cash Budget For November and December, 2013 November December Cash balance, beginning $38,700 0 Plus: Cash receipts $484,400 $403,000 Total Cash Available $523,100 $403,000 Cash disbursements, prior to financing $467,000 $431,300 Plus: Minimum cash balance (given) $38,700 $38,700 Total Cash Needed $505,700 $470,000 Excess (deficiency of) cash, before financing effects $17,400 -$67,000 Financing: Balance Short term loan beginning of month $38,700 Short-term borrowing, beginning of the month 0 Repayments (loan principal), end of the month 38700 Balance Short term loan end of month Interest (@11.00%), paid in cash @ end of the month Total effects of financing Ending cash balance Most of the points are on cells I39, I40 and L39, L40 You (Steven Rohrbacher) are a relatively recent hire to the Hartz & Co., a local manufacturer of plumbing supply products. You have been asked to prepare for a presentation to the company’s management a condensed cash-flow statement for the months of November and December, 2013. The cash balance at November 1st was $38,700. It is the company’s policy to maintain a minimum cash balance of $38,700 at the end of each month. Cash receipts (from cash sales and collection of accounts receivable) are projected to be $484,400 for November and $403,000 for December. Cash disbursements (sales commissions, advertising, delivery expense, wages, utilities, etc.), prior to financing activity, are scheduled to be $467,000 in November and $431,300 in December. Borrowing, when needed, is done at the beginning of the month - in increments of $900. The annual interest rate on any such loans is estimated to be 11.00%. Interest on any outstanding loans is paid in cash at the end of the month. Interest on any outstanding loans is paid in cash at the end of the month. Repayments of principal (if any) are assumed to occur at the end of the month. As of November 1st, the company has a $38,700 short-term loan from the local bank. Required:   Use the preceding information to prepare the cash budget for November and December. Data Input: Cash balance, November 1st $38,700 Minimum required cash balance $38,700 Budgeted cash receipts: November $484,400 December $403,000 Budgeted cash disbursements: November $467,000 December $431,300 Interest rate on borrowings 11.0% per year Short-term loan payable, as of November 1st $38,700 Borrowings in increments of $900 Solution: Cash Budget For November and December, 2013 November December Cash balance, beginning $38,700 0 Plus: Cash receipts $484,400 $403,000 Total Cash Available $523,100 $403,000 Cash disbursements, prior to financing $467,000 $431,300 Plus: Minimum cash balance (given) $38,700 $38,700 Total Cash Needed $505,700 $470,000 Excess (deficiency of) cash, before financing effects $17,400 -$67,000 Financing: Balance Short term loan beginning of month $38,700 Short-term borrowing, beginning of the month 0 Repayments (loan principal), end of the month 38700 Balance Short term loan end of month Interest (@11.00%), paid in cash @ end of the month Total effects of financing Ending cash balance Most of the points are on cells I39, I40 and L39, L40 You (Steven Rohrbacher) are a relatively recent hire to the Hartz & Co., a local manufacturer of plumbing supply products. You have been asked to prepare for a presentation to the company’s management a condensed cash-flow statement for the months of November and December, 2013. The cash balance at November 1st was $38,700. It is the company’s policy to maintain a minimum cash balance of $38,700 at the end of each month. Cash receipts (from cash sales and collection of accounts receivable) are projected to be $484,400 for November and $403,000 for December. Cash disbursements (sales commissions, advertising, delivery expense, wages, utilities, etc.), prior to financing activity, are scheduled to be $467,000 in November and $431,300 in December. Borrowing, when needed, is done at the beginning of the month - in increments of $900. The annual interest rate on any such loans is estimated to be 11.00%. Interest on any outstanding loans is paid in cash at the end of the month. Interest on any outstanding loans is paid in cash at the end of the month. Repayments of principal (if any) are assumed to occur at the end of the month. As of November 1st, the company has a $38,700 short-term loan from the local bank. Required:   Use the preceding information to prepare the cash budget for November and December. Data Input: Cash balance, November 1st $38,700 Minimum required cash balance $38,700 Budgeted cash receipts: November $484,400 December $403,000 Budgeted cash disbursements: November $467,000 December $431,300 Interest rate on borrowings 11.0% per year Short-term loan payable, as of November 1st $38,700 Borrowings in increments of $900 Solution: Cash Budget For November and December, 2013 November December Cash balance, beginning $38,700 0 Plus: Cash receipts $484,400 $403,000 Total Cash Available $523,100 $403,000 Cash disbursements, prior to financing $467,000 $431,300 Plus: Minimum cash balance (given) $38,700 $38,700 Total Cash Needed $505,700 $470,000 Excess (deficiency of) cash, before financing effects $17,400 -$67,000 Financing: Balance Short term loan beginning of month $38,700 Short-term borrowing, beginning of the month 0 Repayments (loan principal), end of the month 38700 Balance Short term loan end of month Interest (@11.00%), paid in cash @ end of the month Total effects of financing Ending cash balance Most of the points are on cells I39, I40 and L39, L40

Explanation / Answer

November December Cash Balance, Beginning 38700 845 add: Cash Receipts 484400 403000 Total Cash Available 523100 403845 Less: Cash Disbursment prior to financing 467000 431300 add: Minimum Cash Balance 38700 38700 Total Cash Needed 505700 470000 Excess/(Deficiency) 17400 -66155 Financing: Short Term Loand Beginning 38700 22500 Short Term Borrowing, beginning of the month 0 106200 Repayment of Loand, end of the month 16200 0 Balance Short term Loand, end of the month 22500 128700 Interest Payd 11% for one month 355 1180 Total Effect of Financing 16555 1180 Ending Cash Balance 845 38866

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