THIS PART OF THE QUESTION IS WORDED TERRIBLY AND I DON\'T UNDERSTAND IT. PLEASE
ID: 2452394 • Letter: T
Question
THIS PART OF THE QUESTION IS WORDED TERRIBLY AND I DON'T UNDERSTAND IT. PLEASE HELP WITH THE CELLS THAT ARE IN RED. ITS ABOUT MASTER BUDGETING, SPECIFICALLY THE FINANCING SECTION OF THE CASH BUDGET :
h. h. Management would like to maintain a minimum cash balance of at least $4,000 at the end of each Management would like month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarterExplanation / Answer
Working
Interest = 3000*3% + 7000*2% = 230
Shilow Company Cash Budget April May June Quarter - Total Cash balance, beginning 8,300 4,380 4,685 8,300 Add : Cash Collection 67,600 77,000 94,000 238,600 Total cash available 75,900 81,380 98,685 246,900 Less disbursements: For Inventory 55,800 66,375 61,425 183,600 For Expenses 16,420 17,320 21,820 55,560 For Equipment 2,300 0.00 0.00 2,300 Total cash disbursements 74,520 83,695 83,245 241,460 Excess (deficiency) of receipts over disbursements 1,380 (2,315) 15,440 5,440 Financing: Borrowings 3,000 7,000 0.00 10,000 Repayments 0.00 0.00 (10,000) (10,000) Interest 0.00 0.00 (230) (230) Total financing 3,000 7,000 (10,230) (230) Cash balance, ending 4,380 4,685 5,210 5,210Related Questions
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