9) Looking ahead, assume the following for April & May… Total expenses (includin
ID: 2526319 • Letter: 9
Question
9) Looking ahead, assume the following for April & May… Total expenses (including RM cash purchases) are expected to be $19,000 in April and $12,000 in May. Total expenses include $1,500 of depreciation expense each month, while all other expenses included are paid in cash. The firm wishes to maintain a minimum cash balance of $20,000 each month in the coming year. Party Time borrows from its bank in increments of $2,500 in order to maintain its desired cash balance, and no interest is charged if a loan is repaid within one month.
Calculate the ending cash balance for January and February using this information.
April
May
Beginning Cash Balance
$20,000
Cash Collections
$15,100
$17,200
Total Cash Payments
Balance before financing
Amount Borrowed or Repaid
Ending Cash Balance
April
May
Beginning Cash Balance
$20,000
Cash Collections
$15,100
$17,200
Total Cash Payments
Balance before financing
Amount Borrowed or Repaid
Ending Cash Balance
Explanation / Answer
Cash budget :
April May Beginning balance 20000 20100 Cash Collections 15100 17200 Total Cash Payments -17500 -10500 Balance before financing 17600 26800 Amount Borrowed or Repaid 2500 -2500 Ending Cash Balance 20100 24300Related Questions
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