Karim Corporation requires a minimum $8,000 cash balance. Loans taken to meet this requirement cost 1% interest per month (paid at the end of each month). Any preliminary cash balance above $8,000 is used to repay loans at month-end. The cash balance on July 1 is $8,400, 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 Beginning cash balance July $ 20,000 28,000 Total cash available Less: Cash payments for Interest on loan 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.) All items excluding interest Total cash payments Preliminary cash balance Loan activity Additional loan (loan repayment) Ending cash balance August $ 26,000 30,000 Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month September $ 40,000 22,000 KARIM CORPORATION Cash Budget $ July Loan balance $ 8,400 $ 20,000 28,400 0 0 0 August 8,000 $ 26,000 34,000 76 September 76 8,000 40,000 48,000 117 117

Karim Corporation requires a minimum $8,000 cash balance. Loans taken to meet this requirement cost 1% interest per month (paid at the end of each month). Any preliminary cash balance above $8,000 is used to repay loans at month-end. The cash balance on July 1 is $8,400, 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 Beginning cash balance July $ 20,000 28,000 Total cash available Less: Cash payments for Interest on loan 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.) All items excluding interest Total cash payments Preliminary cash balance Loan activity Additional loan (loan repayment) Ending cash balance August $ 26,000 30,000 Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month September $ 40,000 22,000 KARIM CORPORATION Cash Budget $ July Loan balance $ 8,400 $ 20,000 28,400 0 0 0 August 8,000 $ 26,000 34,000 76 September 76 8,000 40,000 48,000 117 117

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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