Carol's Chocolate Company has prepared its third quarter budget and provided the following data: Jul Aug Sep Cash collections $49,000 $39,700 $47,000 Cash payments: Purchases of direct materials 31,000 21,400 17,000 Operating expenses 12,200 8,700 11,700 Capital expenditures 13,100 24,400 0 The cash balance on June 30 is projected to be $5,500. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the ending projected cash balance before financing for August
Carol's Chocolate Company has prepared its third quarter budget and provided the following data: Jul Aug Sep Cash collections $49,000 $39,700 $47,000 Cash payments: Purchases of direct materials 31,000 21,400 17,000 Operating expenses 12,200 8,700 11,700 Capital expenditures 13,100 24,400 0 The cash balance on June 30 is projected to be $5,500. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the ending projected cash balance before financing for August
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Question
Carol's Chocolate Company has prepared its third quarter budget and provided the following data:
|
|
Jul
|
Aug
|
Sep
|
|
Cash collections
|
$49,000
|
$39,700
|
$47,000
|
|
Cash payments:
|
|
|
|
|
Purchases of direct materials
|
31,000
|
21,400
|
17,000
|
|
Operating expenses
|
12,200
|
8,700
|
11,700
|
|
Capital expenditures
|
13,100
|
24,400
|
0
|
The cash balance on June 30 is projected to be $5,500. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the ending projected cash balance before financing for August.
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