James Smith has been working on Crane 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 $500,000; and cash disbursements will be $534,000. Crane Paints desires to maintain a $30,000 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) How much will Crane Paints need to borrow from the bank at the beginning of March? Crane Paints should borrow 23500 (b) Assuming that Crane Paints has $20,000 in excess cash budgeted for April, how much principalwill the company plan to repay? How much interest will be repaid in April? Principal to be repaid 2$ 19500 Interest to be repaid $ 235 %24 %24

James Smith has been working on Crane 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 $500,000; and cash disbursements will be $534,000. Crane Paints desires to maintain a $30,000 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) How much will Crane Paints need to borrow from the bank at the beginning of March? Crane Paints should borrow 23500 (b) Assuming that Crane Paints has $20,000 in excess cash budgeted for April, how much principalwill the company plan to repay? How much interest will be repaid in April? Principal to be repaid 2$ 19500 Interest to be repaid $ 235 %24 %24

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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