Question

1. Durango Mountain Bike Tours' ending cash balance as of December 31, 2020 was $10,000. Its expected cash collections and payments for the next six months are given in the following table. Collections $18,563 Payments $21,825 30,881 35,100 Month January February March April May June 51,075 48,600 < 81,844 109,688 141,750 68,344 90,113 107,100 Calculate the firm's expected ending cash balance for each month. b. Assuming that the firm must maintain an ending cash balance of at least $12,000, how much must they borrow during each month? c. If the firm must pay 5% annual interest on its short-term borrowing, what are the ending cash balances for each month? d. What are the ending cash balances if the firm uses any cash in excess of the minimum to pay off its short-term borrowing in each month?

Answer 1

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Answer a	January	February	March	April	May	June
Beginning Cash Balance	10,000.00	6,738.00	2,519.00	4,994.00	18,494.00	38,069.00
Plus: Collections	18,563.00	30,881.00	51,075.00	81,844.00	109,688.00	141,750.00
Less: Cash Payments	(21,825.00)	(35,100.00)	(48,600.00)	(68,344.00)	(90,113.00)	(107,100.00)
Ending cash balance	6,738.00	2,519.00	4,994.00	18,494.00	38,069.00	72,719.00
Answer b	January	February	March	April	May	June
Beginning Cash Balance	10,000.00	12,000.00	12,000.00	14,475.00	27,975.00	47,550.00
Plus: Collections	18,563.00	30,881.00	51,075.00	81,844.00	109,688.00	141,750.00
Less: Cash Payments	(21,825.00)	(35,100.00)	(48,600.00)	(68,344.00)	(90,113.00)	(107,100.00)
Ending cash balance before borrowings	6,738.00	7,781.00	14,475.00	27,975.00	47,550.00	82,200.00
Less: Minimum cash balance	12,000.00	12,000.00	12,000.00	12,000.00	12,000.00	12,000.00
Surplus/ (Deficit)	(5,262.00)	(4,219.00)	2,475.00	15,975.00	35,550.00	70,200.00
Borrowings to be done (Deficit amount)	5,262.00	4,219.00	-	-	-	-
Ending cash balance after borrowings	12,000.00	12,000.00	14,475.00	27,975.00	47,550.00	82,200.00
Answer c	January	February	March	April	May	June
Beginning Cash Balance	10,000.00	12,000.00	12,000.00	14,435.00	27,895.00	47,430.00
Plus: Collections	18,563.00	30,881.00	51,075.00	81,844.00	109,688.00	141,750.00
Less: Cash Payments	(21,825.00)	(35,100.00)	(48,600.00)	(68,344.00)	(90,113.00)	(107,100.00)
Less: Interest Payments	-	(22.00)	(40.00)	(40.00)	(40.00)	(40.00)
Ending cash balance before borrowings	6,738.00	7,759.00	14,435.00	27,895.00	47,430.00	82,040.00
Less: Minimum cash balance	12,000.00	12,000.00	12,000.00	12,000.00	12,000.00	12,000.00
Surplus/ (Deficit)	(5,262.00)	(4,241.00)	2,435.00	15,895.00	35,430.00	70,040.00
Borrowings to be done (Deficit amount)	5,262.00	4,241.00	-	-	-	-
Ending cash balance after borrowings	12,000.00	12,000.00	14,435.00	27,895.00	47,430.00	82,040.00
Answer d	January	February	March	April	May	June
Beginning Cash Balance	10,000.00	12,000.00	12,000.00	12,000.00	18,403.00	37,978.00
Plus: Collections	18,563.00	30,881.00	51,075.00	81,844.00	109,688.00	141,750.00
Less: Cash Payments	(21,825.00)	(35,100.00)	(48,600.00)	(68,344.00)	(90,113.00)	(107,100.00)
Less: Interest Payments	-	(22.00)	(40.00)	(29.00)	-	-
Less: Borrowings Paid	-	-	(2,435.00)	(7,068.00)
Ending cash balance before borrowings	6,738.00	7,759.00	12,000.00	18,403.00	37,978.00	72,628.00
Less: Minimum cash balance	12,000.00	12,000.00	12,000.00	12,000.00	12,000.00	12,000.00
Surplus/ (Deficit)	(5,262.00)	Add a comment Know the answer? Add Answer to: 1. Durango Mountain Bike Tours' ending cash balance as of December 31, 2020 was $10,000. Its... Your Answer: Post as a guest Your Name: What's your source? Earn Coins Coins can be redeemed for fabulous gifts. Log In Sign Up Post as anonymous Post Your Answer Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free. Similar Homework Help Questions Lakewood Laser SkinCare's ending cash balance as of January 31, 2015 (the end of its fiscal... Lakewood Laser SkinCare's ending cash balance as of January 31, 2015 (the end of its fiscal year 2014) was $15,000. Its expected cash collections and payments for the next six months are given in the following table. Month Collections Payments February $24,750 $29,100 March 27,450 31,200 April 34,050 32,400 May 43,650 36,450 June 48,750 40,050 July 54,000 40,800 a. 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