dy Busi 18 Spring 2018 o Del Test: Chapter 22 Test Time Remalining 00:1539 Submi
ID: 2559222 • Letter: D
Question
dy Busi 18 Spring 2018 o Del Test: Chapter 22 Test Time Remalining 00:1539 Submit Test This Test: 20 pts possible This Question: 2 pts ies Kennison, Inc has prepared is third quater budget and provided the folowing data Aug 49.000 40000 47000 28,000 21,900 8100 12 500 100 11,00 3.700 24,500 Purchases of dieect materials al Selling i Operating expenses balanoe of $5,000 and is authored to bomow at the end of each morth to The cash balance on June 30 is projected to be $4,100 The company has to maintsin a minimum cash month a an are assumed t cnements of $5,000 and has company have to bornow at the end of August? end of the month. The loan balance should be repaid in incremenis of $5,000 whenever there is suplus $10.000 D. $15.000 Budget figun for cost of necessary to Click 10 select your answerExplanation / Answer
Answer:
Company has to borrow for the month of the august is =D) 15,000
Working notes for the above answer is as under
Cash Budget
Jul
Aug
Beginning cash balance
$4,100
$8,900
Cash collections
49,000
40,000
Cash available
53,100
48,900
Cash payments:
Purchases of inventory
28,000
21,900
Operating expenses
12,500
9,100
Capital expenditures
13,700
24,500
Total cash payments
$54,200
$55,500
Ending cash balance before financing
($1,100)
($6,600)
Minimum cash balance desired
-5,000
-5,000
Cash excess/(deficiency)
-6,100
-11,600
Financing
Borrowing at end of month
10,000
15,000
Principal payments at end of month
Interest expense at 4%
33.3
Total effects of financing
10,000
14,967
Ending cash balance
$8,900
$8,367
Cash Budget
Jul
Aug
Beginning cash balance
$4,100
$8,900
Cash collections
49,000
40,000
Cash available
53,100
48,900
Cash payments:
Purchases of inventory
28,000
21,900
Operating expenses
12,500
9,100
Capital expenditures
13,700
24,500
Total cash payments
$54,200
$55,500
Ending cash balance before financing
($1,100)
($6,600)
Minimum cash balance desired
-5,000
-5,000
Cash excess/(deficiency)
-6,100
-11,600
Financing
Borrowing at end of month
10,000
15,000
Principal payments at end of month
Interest expense at 4%
33.3
Total effects of financing
10,000
14,967
Ending cash balance
$8,900
$8,367
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