Karim Corp. requires a minimum $9,000 cash balance. Loans taken to meet this requirement cost 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $9,400, 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$25,000 $33,000 $41,000 Cash payments 29,500 31,000 33,000 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.) KARIM CORP.Cash BudgetFor July, August, and September JulyAugustSeptemberBeginning cash balance$9,400 Total cash available Preliminary cash balance Ending cash balance Loan balanceLoan balance - Beginning of month$0 Additional loan (loan repayment) Loan balance - End of month

working notes : Total Cash Available= 9,400+25,000=34,400 Ending: Cash Balance= IN AUG =10,959…

Answered: Karim Corp. requires a minimum $9,000…

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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Karim Corp. requires a minimum $9,000 cash balance. Loans taken to meet this requirement cost 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $9,400, 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	$	25,000		$	33,000	$	41,000
Cash payments		29,500			31,000		33,000

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.)

KARIM CORP.
Cash Budget
For July, August, and September
	July	August	September
Beginning cash balance	$9,400

Total cash available


Preliminary cash balance

Ending cash balance
Loan balance
Loan balance - Beginning of month	$0
Additional loan (loan repayment)
Loan balance - End of month

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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