using the information above: how much interest and what month will the interest
ID: 2486656 • Letter: U
Question
using the information above:
how much interest and what month will the interest be paid?
a. 1300 february
b. 2600 february
c. 1300 january
d. 1300 march
21 22. A Corporation is preparing a bodget for the finst quarter (Famuary, February, and March) of 2016 JanuaryFebrary March $490,000 $630,000 $822500 Cash Receipts Total Cash disbursements $620,000 $450,000 5850,000 The company's beginning cash balance for January is $30,000. The company requires a minimum cash balance of $30000 and may borrow any amount needed from a local bank ata monthly rate of 1.0%. The company may borrow any amount at the beginning of any month repay its loans, or any part of its loans, at the end of the month. Interest payments are doe on any any amount needed from a local bank at a repay its losans, ot any part of its oans, st the end of the month. Interest ayments are doe on any principal at the time it is repaild 21, When and how much must be borowed by the company? a. $100,000 in January b. $130,000 in lanvaary c. $130,000 in Febnuary d. $100,000 in MarchExplanation / Answer
In the month of January:
Opening Balance = $ 30,000
Cash Receipts = $ 490,000
Total available Cash (30000+490000) = $ 520,000
Cash Disbursements = $ 620,000
required Closing cash balance = $ 30,000
Total required cash = (620000+30000) = $ 650,000
Therefore. Amount borrowed in the month of Janauary (650000-620000) = $ 130,0000
rate of interest = 1%
Interest = $ 1,300 for the month january paid in the month of february.
The Answer is 1300 february.
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