(Complete all answer boxes. Enter a \"0\" for any zero balances. Round all amoun
ID: 2600411 • Letter: #
Question
(Complete all answer boxes. Enter a "0" for any zero balances. Round all amounts entered into the cash budget to the nearest whole dollar. Enter a cash deficiency and/or negative effects of financing with a minus sign or parentheses.)
Hoppy Company requires a minimum cash balance of $3,100. When the company expects a cash deficlency, it borrows the exact amount required on the first of the month. Expected excess cash is used to repay any amounts owed. Interest owed rom the previous month's principal balance is paid on the first of the month at 1 1% per year. The company has already completed the budgeting process for the first quarter for cash receipts and cash payments or all expenses except interest (Click the icon to view the completed budget information.) Hoppy does not have any outstanding debt on January 1. Complete the cash budget for the first quarter for Hoppy Company. Round interest expense to the nearest whole dollar For the Three Months Ended March 31 January February March Total Beginning cash balance Cash receipts Cash available Cash payments: 3,100 22,500 25,600 28,000 42,500 93,000 All expenses except interest 32,000 33,000 38,000 103,000 Interest expense Total cash payments Ending cash balance before financing Minimum cash balance desired Projected cash excess (deficiency) Financing: 32,000 (3,100)(3,100) (3,100) (3,100) Borrowing Principal repayments Total effects of financing Ending cash balanceExplanation / Answer
January
February
March
Total
Beginning Cash Balance
3,100
3,100
3,100
9,300
Cash Receipts
22,500
28,000
42,500
93,000
Cash Available
25,600
31,100
45,600
102,300
Cash Payments:
All Expenses except interest
32,000
33,000
38,000
103,000
Interest
0
87
134
221
Total Cash Payments
32,000
33,087
38,134
103,221
Ending Cash Balance before
Financing
(6,400)
(1,987)
7,466
(921)
Minimum Cash Balance Desired
(3,100)
(3,100)
(3,100)
(9,300)
Projected Cash Excess (Deficiency)
(9,500)
(5,087)
4,366
(10,221)
Financing:
Borrowing
9,500
5,087
-
14,587
Principal Payments
0
0
(4,366)
(4,366)
Total effects of Financing
9,500
5,087
(4,366)
10,221
Ending Cash Available
3,100
3,100
3,100
9,300
It is mentioned that the company will raise the exact amount of deficiency at the beginning of next month so any deficiency in January will be raised on 1st of February and any excess cash will be used to repay the principal amount.
Interest = Amount raised * Rate * Month
Interest due in Feb. = 9,500(Raised) * 11% * 1/12 months
=$87
Interest Due in March = 14,587(9,500+5,087) * 11% * 1/12 months
= $134
January
February
March
Total
Beginning Cash Balance
3,100
3,100
3,100
9,300
Cash Receipts
22,500
28,000
42,500
93,000
Cash Available
25,600
31,100
45,600
102,300
Cash Payments:
All Expenses except interest
32,000
33,000
38,000
103,000
Interest
0
87
134
221
Total Cash Payments
32,000
33,087
38,134
103,221
Ending Cash Balance before
Financing
(6,400)
(1,987)
7,466
(921)
Minimum Cash Balance Desired
(3,100)
(3,100)
(3,100)
(9,300)
Projected Cash Excess (Deficiency)
(9,500)
(5,087)
4,366
(10,221)
Financing:
Borrowing
9,500
5,087
-
14,587
Principal Payments
0
0
(4,366)
(4,366)
Total effects of Financing
9,500
5,087
(4,366)
10,221
Ending Cash Available
3,100
3,100
3,100
9,300
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