Question

Karim Corp. requires a minimum $8,000 cash balance. Loans taken to meet this requirement cost 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) follow August $26,000 30,000 September $40,000 22,000 July $20,000 28,000 Cash receipts Cash payments s0 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.) es KARIM CORP Cash Budget For July, August, and September September July August 8,400 Beginning cash balance $ Total cash available Preliminary cash balance Ending cash balance Loan balance Loan balance - Beginning of month Additional loan (loan repayment) $ 0

Answer 1

Cash Budget
	July	August	September
Beginning Cash Balance	8,400	8,000	8,000
Cash Receipts	20,000	26,000	40,000
Total Cash Available	28,400	34,000	48,000
Cash Payments	28,000	30,000	22,000
Interest Payment	-	76	117
Preliminary Cash Balance	400	3,924	25,883
Loan/(Repayment)	7,600	4,076	(11,676)
Ending Cash Balance	8,000	8,000	14,207
Loan Balance
Loan Balance-Beginning of month	0	7,600	11,676
Additional Loan (Loan Repayment)	7,600	4,076	(11,676)