Karim Corp. requires a minimum $8,000 cash balance. If necessary, loans are take
ID: 2470889 • Letter: K
Question
Karim Corp. requires a minimum $8,000 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $8,400 and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) are: July August September Cash receipts $ 20,000 $ 26,000 $ 40,000 Cash disbursements 28,000 30,000 22,000
Explanation / Answer
Karim Corp.
Cash Budget
July
August
September
Beginning Cash balance
$ 8,400.00
$ 8,000.00
$ 8,000.00
Add: Forecasted cash receipts
$ 20,000.00
$ 26,000.00
$ 40,000.00
Less: Forecasted cash payments
$(28,000.00)
$(30,000.00)
$(22,000.00)
Less: Interest on Borrowings
$ -
$ (76.00)
$ (116.76)
(7600*1%)
(11676*1%)
Available Cash balance
$ 400.00
$ 3,924.00
$ 25,883.24
Borrowings:
Loan Taken
$ 7,600.00
$ 4,076.00
$ -
(8000-400)
(8000-3924)
Repayment
$ -
$ -
$(11,676.00)
Ending Cash Balance
$ 8,000.00
$ 8,000.00
$ 14,207.24
Loan Balance
$ 7,600.00
$ 11,676.00
$ -
(7600+4076)
Karim Corp.
Cash Budget
July
August
September
Beginning Cash balance
$ 8,400.00
$ 8,000.00
$ 8,000.00
Add: Forecasted cash receipts
$ 20,000.00
$ 26,000.00
$ 40,000.00
Less: Forecasted cash payments
$(28,000.00)
$(30,000.00)
$(22,000.00)
Less: Interest on Borrowings
$ -
$ (76.00)
$ (116.76)
(7600*1%)
(11676*1%)
Available Cash balance
$ 400.00
$ 3,924.00
$ 25,883.24
Borrowings:
Loan Taken
$ 7,600.00
$ 4,076.00
$ -
(8000-400)
(8000-3924)
Repayment
$ -
$ -
$(11,676.00)
Ending Cash Balance
$ 8,000.00
$ 8,000.00
$ 14,207.24
Loan Balance
$ 7,600.00
$ 11,676.00
$ -
(7600+4076)
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