Temecula , inc budgets the following cash receipts and cash payments for the qua

Question

Temecula , inc budgets the following cash receipts and cash payments for the quarter of 2014: The firm has dollar 5,000 of cash on hand at the end of june, and Management budgets an ending cash balance of dollar 5,000 at the end of each month. Temecular has arranged short-term borrowing from its bank as needed. The agreement requires Temecula to borrow in dollar 1,000 increments at the beginning of the months needed. Interest is 6 percent annually Temecula will repay principal in thousand dollar increments plus accured interest on all browings at the end of months when funds permit. Requires : Complete temecula's short term financing budget for the quarter by completing the following table.

Explanation / Answer

July ($) August ($) Sep. ($) Total ($) Beginning cash 5,000 5,000 5,000 15,000 Monthly cash inflow -3,000 -6,000 10,000 1,000 Net cash before financing 2,000 -1,000 15,000 16,000 Borrowings ($5,000 - $2,000)($5,000 + $1,000) 3,000 6,000 0 9,000 Repayment of borrowing 0 0 -9,000 -9,000 Interest payment ($3,000*6/100*3/12 months) ($6,000*6/100*2/12 months) 0 0 -105 -105 Ending cash 5,000 5,000 5,895 15,895

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