Exercise 20-20 (Algo) Cash budget LO P2 Karim Corporation requires a minimum $8,700 cash balance. Loans taken to meet this requirement cost 2% interest per month (paid at the end of each month). Any preliminary cash balance above $8,700 is used to repay loans at month-end. The cash balance on July 1 is $9,100, and the company has no outstanding loans. Budgeted cash receipts (other than for loans received) and budgeted cash payments (other than for loan or interest payments) follow. Cash receipts Cash payments July $ 24,700 29,050 August $ 32,700 30,700 September $ 40,700 32,700 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 is complete but not entirely correct. KARIM CORPORATION Cash Budget July August September Beginning cash balance Add: Cash receipts $ 9,100 $ 8,700 $ 8,700 24,700 32,700 40,700 Total cash available 33,800 41,400 49,400 Add: Cash payments for × Interest on loan 29,050 X 32,700x 40,700x Additional loan (loan repayment) 33,800 41,400 49,400x Total cash payments 62,850 74,100 90,100 Preliminary cash balance $ 29,050 $ 30,700 $ 32,700X Loan activity Additional loan (loan repayment) Ending cash balance Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month 3,950 1,921 x 2,029 x $ 8,700 $ 8,700 $ 14,630 Loan balance $ 0 $ 3,950 $ 2,029 3,950 1,921 2,029 $ 3,950 $ 2,029 $ 0
Exercise 20-20 (Algo) Cash budget LO P2 Karim Corporation requires a minimum $8,700 cash balance. Loans taken to meet this requirement cost 2% interest per month (paid at the end of each month). Any preliminary cash balance above $8,700 is used to repay loans at month-end. The cash balance on July 1 is $9,100, and the company has no outstanding loans. Budgeted cash receipts (other than for loans received) and budgeted cash payments (other than for loan or interest payments) follow. Cash receipts Cash payments July $ 24,700 29,050 August $ 32,700 30,700 September $ 40,700 32,700 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 is complete but not entirely correct. KARIM CORPORATION Cash Budget July August September Beginning cash balance Add: Cash receipts $ 9,100 $ 8,700 $ 8,700 24,700 32,700 40,700 Total cash available 33,800 41,400 49,400 Add: Cash payments for × Interest on loan 29,050 X 32,700x 40,700x Additional loan (loan repayment) 33,800 41,400 49,400x Total cash payments 62,850 74,100 90,100 Preliminary cash balance $ 29,050 $ 30,700 $ 32,700X Loan activity Additional loan (loan repayment) Ending cash balance Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month 3,950 1,921 x 2,029 x $ 8,700 $ 8,700 $ 14,630 Loan balance $ 0 $ 3,950 $ 2,029 3,950 1,921 2,029 $ 3,950 $ 2,029 $ 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Exercise 20-20 (Algo) Cash budget LO P2
Karim Corporation requires a minimum $8,700 cash balance. Loans taken to meet this requirement
cost 2% interest per month (paid at the end of each month). Any preliminary cash balance above
$8,700 is used to repay loans at month-end. The cash balance on July 1 is $9,100, and the company
has no outstanding loans. Budgeted cash receipts (other than for loans received) and budgeted cash
payments (other than for loan or interest payments) follow.
Cash receipts
Cash payments
July
$ 24,700
29,050
August
$ 32,700
30,700
September
$ 40,700
32,700
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 is complete but not entirely correct.
KARIM CORPORATION
Cash Budget
July
August
September
Beginning cash balance
Add: Cash receipts
$
9,100
$
8,700
$
8,700
24,700
32,700
40,700
Total cash available
33,800
41,400
49,400
Add: Cash payments for
×
Interest on loan
29,050 X
32,700x
40,700x
Additional loan (loan repayment)
33,800
41,400
49,400x
Total cash payments
62,850
74,100
90,100
Preliminary cash balance
$
29,050 $
30,700 $
32,700X
Loan activity
Additional loan (loan repayment)
Ending cash balance
Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance - End of month
3,950
1,921 x
2,029 x
$
8,700 $
8,700
$
14,630
Loan balance
$
0
$
3,950 $
2,029
3,950
1,921
2,029
$
3,950
$
2,029
$
0
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