Question

Karim Corp. requires a minimum $8,800 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $9,200 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. July August September Cash receipts $ 24,800 $ 32,800 $ 40,800 Cash payments 29,200 30,800 32,800 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.)

Answer 1

Cash Budget
Particulars			July	August	September
beginning cash balance			9200	8800	8800
cash receipt from customer			24800	32800	40800
total cash available			34000	41600	49600
Cash payments			-29200	-30800	-32800
interest on loan @1%				-40	-20
preliminary cash balance			4800	10760	16780
loan taken/repay			4000	-1960	-2040
ending cash balance			8800	8800	14740
Loan balance
at the beginning			0	4000	2040
additional loan			4000	-1960	-2040
loan balance at the end			4000	2040	0

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