Question

Exercise Help Save & E Che Karim Corp. requires a minimum $9,500 cash balance. Loans taken to meet this requirement cost 2% interest per month paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $9,900, and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan of interest payments) follow Cash receipts Cash payments July $25,500 30,250 August $33, 5 31,500 September 5 41.50 33,500 Prepare a cash budget for July August, and September (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar) KARIM CORP Cash Budget For July, August, and September July August $ 9,900 $ 9,500 25.500 33.500 | September $ 9.500 41.500 Beginning cash balance Cash receipts Total cash available Cash payments 43 000 51000 30.250 31,500 33,500 Prey 4 of 10 Next ©^ 49 O @ 9 (m) search

Answer 1

Answer KARIM CORP. Cash Budget For July, August and September July Beginning Cash Balance $9,900 Cash Receipts $25,500 Total Available Cash $35,400 Cash Payment $30,250 Interest Expense Preliminary Cash Balance $5,150 Additional loan (loan repayment) $4,350 Ending cash balance $9,500 August $9,500 $33,500 $43,000 $31,500 $87 $11,413 ($1,913) $9,500 September $9,500 $41,500 $51,000 $33,500 $0 $49 $17,451 ($2,437) $15,014 Loan Balance Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month $0 $4,350 $4,350 $4,350 ($1,913) $2,437 $2,437 ($2,437) $0 Explanations Interest Expense for August = $4,350 x 2% = $87 Interest Expense for September = $2,437 x 2% = $49