A company has the following excess (deficiency) of cash receipts over cash disbu

Question

A company has the following excess (deficiency) of cash receipts over cash disbursements projected for the next year on a quarterly basis. It will not have any cash at the start of the year. The quarterly interest rate is 2%, and any borrowing and repayment of principal must be in round $1.000 amounts. There is no cash reserve requirement. Assume borrowings and repayments of principal are in round $1,000 amounts Exoess (deficiency) of cash available s (121,140) (41,680) 177,680 2,160 $ 17,020 Prepare a cash budget by quarter and for the year. (Any " indicated by a minus sign.) Repayments" and "Interest" should be Cash Budget For the Year Ended December 31, 20x1 Cash balance, beginning Excess (deficiency) of cash available over disbursements Cash balance before reserve requirement Balance available for repayment (required borrowing) S sso Amount borrowed eegmng of penod Principal repaid nterest paid Total fnancing (or repayments for the period) Cash balance after financing-Free cash balance Cash balance, ending MacBook 20 2 4

Explanation / Answer

Cash Budget For the year ending December 31, 20X1 Quarter Total 1 2 3 4 Cash balance , beginning 1360 1380 5660 0 Excesss/(Deficiency) of cash available over disbursements -121140 -41680 177680 2160 17020 Cash balance before reserve requirement -121140 -40320 179060 7820 17020 Balance available for repayment(required borrowing) -121140 -40320 179060 7820 17020 Financing: Amount Borrowed (Beginning of the period) 125000 45000 0 0 170000    Principal Repaid -170000 0 -170000    Interest paid -2500 -3300 -3400 0 -9200 Total financing or (repayments for the period) 122500 41700 -173400 0 -9200 Cash balance after financing - free cash balance 1360 1380 5660 7820 7820 Cash balance ending 1360 1380 5660 7820 7820 Interest is charged for the quarter in which the repayment is made. That means it is assumed that the repayment is made at the end of the quarter.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.