Foyert Corp. requires a minimum $7,700 cash balance. If necessary, loans are tak
ID: 2488402 • Letter: F
Question
Foyert Corp. requires a minimum $7,700 cash balance. If necessary, loans are taken to meet this requirement at a cost of 2% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on October 1 is $7,700 and the company has an outstanding loan of $3,700. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) Prepare a cash budget for October, November, and December. (Enter your "Interest on bank loan' answer to whole dollar amount.)Explanation / Answer
Solution :
Cash Budget
october
november
december
Begining cash balance
7,700
7,700
7,700
cash receipts
23,700
17,700
21,700
Total cash available
31,400
25,400
29,400
cash disbursement
26,550
16,700
14,300
interest on bank loan
74
132
115
Preliminary cash balance
4,776
8,568
14,984
Additional loan (Repayment)
2,924
- 868
- 5,756
Ending cash balance
7,700
7,700
9,228
Loan balance
Loan balance - begining of month
3,700
6,624
5,756
Additional loan (Repayment)
2,924
- 868
- 5,756
Loan balance - end of month
6,624
5,756
-
Cash Budget
october
november
december
Begining cash balance
7,700
7,700
7,700
cash receipts
23,700
17,700
21,700
Total cash available
31,400
25,400
29,400
cash disbursement
26,550
16,700
14,300
interest on bank loan
74
132
115
Preliminary cash balance
4,776
8,568
14,984
Additional loan (Repayment)
2,924
- 868
- 5,756
Ending cash balance
7,700
7,700
9,228
Loan balance
Loan balance - begining of month
3,700
6,624
5,756
Additional loan (Repayment)
2,924
- 868
- 5,756
Loan balance - end of month
6,624
5,756
-
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