Super Market Supplies Inc. has budgeted the following information for June: Supe
ID: 2536004 • Letter: S
Question
Super Market Supplies Inc. has budgeted the following information for June:
Super Market Supplies Inc. has a minimum cash balance policy of $2,000 at the end of any month.
If there is a cash shortage, the company borrows money from the bank. All cash is borrowed at the end of the month in $1,000 increments and interest is paid monthly at 1% at the end of the next month. The company had no debt before June 1st. The amount of interest paid on July 31 would be:
$105
$73
$80
$60
$110
Cash at 6/1 $3,200 Cash receipts in June $26,500 Cash payments in June $35,000Explanation / Answer
Ending cash balance in June = 3200+26500-35000= -5300 Cash to be borrowed = $8000 Amount of interest paid on July 31 = 8000*1% = $80 Option C is correct
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