Question

Check my work Foyert Corp. requires a minimum $7.700 cash balance. If necessary, loans are taken to meet this requirement at a cost of 2% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on October 1 is $7.700 and the company has an outstanding loan of $3,700. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow. Cash receipts Cash payments October $23,700 26,550 November $17,700 16,700 December $21,700 14,300 Prepare a cash budget for October, November, and December. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) FOYERT CORP. Cash Budget For October, November, and December October November Beginning cash balance S 7700 December Total cash available Preliminary cash balance Ending cash balance Loan balance

Answer 1

FOYERT CORP
Cash Budget
For October, November and December
	October	November	December
Beginning cash balance	$                      7,700	$                        7,700	$                        7,700
Add: Total Cash Receipts	$                   23,700	$                      17,700	$                      21,700
Total Cash Available	$                   31,400	$                      25,400	$                      29,400
Less:Total Cash Payments	$                   26,550	$                      16,700	$                      14,300
Less: Interest on bank loans	$3,700*2% = $74	$6,624*2% = $132	$5,756*2% = $115
Preliminary cash balance	$                      4,776	$                        8,568	$                      14,985
Additional loan (loan repayment)	$                      2,924	$                         (868)	$                      (5,756)
Ending cash balance	$                      7,700	$                        7,700	$                        9,229
Loan Balance
Loan balance - Beginning of the month	$                      3,700	$                        6,624	$                        5,756
Additional loan (Loan repayment)	$                      2,924	$                         (868)	$                      (5,756)
Loan balance - End of month	$                      6,624	$                        5,756	$                                 -

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