Assuming that Sheffield Paints has $20,000 in excess cash budgeted for April, how much principal will the company plan to repay? How much interest will be repaid in April? Principal to be repaid Interest to be repaid

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Matthew Young has been working on Sheffield Paints' cash budget for the coming year. Based on his
projections for March, the beginning cash balance will be $40,700, cash collections will be $550,000,
and cash disbursements will be $584,000. Sheffield Paints desires to maintain a $45,000 minimum
cash balance. The company has a 12% open line of credit with its bank, which provides short-term
borrowings in $500 increments. All borrowings are made at the beginning of the month, and all
repayments are made at the end of the month (in $500 increments). Accrued interest is paid at the
time of repayment.
(a)
Your answer is correct.
How much will Sheffield Paints need to borrow from the bank at the beginning of March?
Sheffield Paints should borrow
$
38500
%24
Transcribed Image Text:Matthew Young has been working on Sheffield Paints' cash budget for the coming year. Based on his projections for March, the beginning cash balance will be $40,700, cash collections will be $550,000, and cash disbursements will be $584,000. Sheffield Paints desires to maintain a $45,000 minimum cash balance. The company has a 12% open line of credit with its bank, which provides short-term borrowings in $500 increments. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in $500 increments). Accrued interest is paid at the time of repayment. (a) Your answer is correct. How much will Sheffield Paints need to borrow from the bank at the beginning of March? Sheffield Paints should borrow $ 38500 %24
Assuming that Sheffield Paints has $20,000 in excess cash budgeted for April, how much principal
will the company plan to repay? How much interest will be repaid in April?
Principal to be repaid
$
Interest to be repaid
$
Transcribed Image Text:Assuming that Sheffield Paints has $20,000 in excess cash budgeted for April, how much principal will the company plan to repay? How much interest will be repaid in April? Principal to be repaid $ Interest to be repaid $
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