Question

Homework: Topic 3 Homework (Chapter 22) Score: 9.55 of 10 pts 3 of 4 (3 complete) CP22-57 Continuing Problem (similar to) HW Score: 32.58%, 19.55 of 60 pts Question Help Assume Dean Consulting began January with $14,000 cash Management forecasts that cash receipts from credit customers will be $56,000 in January and 60.000 in February. Projected cash payments include upment purchases (522,000 in January and $45.000 in February) and selling and administrative expenses $10.00 each month) Dean's bank requires a $20,000 minimum balance in the firm's checking account. At the end of any month when the account balance falls below S20,000, the bank automatically extends credit to the firm in multiples of $5,000. Dean borrows as little as possible and pays back loans each month in $1,000 increments, plus 12% interest on the entire unpaid principal. The first payment occurs one month after the loan Requirements 1. Prepare Dean Consulting's cash budget for January and February 2018 2. How much cash will Dean borrow in February if cash receipts from customers that month total $50,000 instead of $60,000? Borrowing Principal repayments Incom Total effects of financing 37,000 $ 42.000 42 Ending cash balance for SO in BA 34 similar to (0/36 Requirement 2. How much cash will Dean borrow in February if cash receipts from customers that month total $50,000 instead of $60.0007 (Enter a " borrowings and/or repayments.) If cash receipts are $50,000 instead of $60,000 in February, the company wil borrow l and repay $_ Enter your answer in the edit fields and then click Check Answer Clear All All parts showing Check Answer S Permissions Cont LUPILULU TE SU CULOUR MISSION

Answer 1

Part 1

DANIELS CONSULTING, INC. Cash Budget For the Two Months Ended February 28, 2018
	January	February	Total
Beginning cash balance	14000	37000	14000
Cash receipts	55000	60000	115000
Cash available	69000	97000	129000
Cash payments:
Capital expenditures	22000	45000	67000
Selling and administrative expenses	10000	10000	20000
Interest expense	0	0	0
Total cash payments	32000	55000	87000
Ending cash balance before financing	37000	42000	42000
Minimum cash balance desired	(20000)	(20000)	(20000)
Projected cash excess (deficiency)	17000	22000	22000
Financing:
Borrowing	0	0	0
Principal repayments	0	0	0
Total effects of financing	0	0	0
Ending cash balance	37000	42000	42000

Part 2

If cash receipts are $50000 instead of $60000 in February, the company will borrow $0 and repay $0

	February Revised
Beginning cash balance	37000
Cash receipts	50000
Cash available	87000
Cash payments:
Capital expenditures	45000
Selling and administrative expenses	10000
Interest expense	0
Total cash payments	55000
Ending cash balance before financing	32000
Minimum cash balance desired	(20000)
Projected cash excess (deficiency)	12000
Financing:
Borrowing	0
Principal repayments	0
Total effects of financing	0
Ending cash balance	$32000

Ending cash balance before financing is $12000 greater than the $20,000 minimum required.