Question

Crane Company is preparing a cash summary budget using the data below. They have already prepared their cash receipts and cash payments budget so that data is provided:

	October	November
Beginning Cash Balance	$16000
Expected Cash Receipts	$63000	$95000
Expected Cash Payments	$45000	$76000

Management always wants to maintain a $41,920 minimum cash balance at the end of every month. If there is an expected cash shortfall in the budget they will be proactive and borrow money at the first day of the month. That way they will not risk having too low of a balance during the month. They can borrow any amount of money needed. They may not pay loans back in installments. They have to pay them back all at once. The interest rate is 12%. Assume if they pay back money, they pay it back on the last day of the month.

What is the ending cash balance for November after all loan repayments of principle and interest?

Round your answer to the nearest whole dollar.

Answer 1

Cash Budget Particulars October November Opening Cash 16000 41920 Cash Collection 63000 95000 Cash available 79000136920 Cash disbursements -450001 - 76000 Net cash 34000 609201 Financing : Loan taken 7920 Laon repayment -79201 Interest paid -79 Closing cash 41920 52921