Karim Corporation requires a minimum $8,300 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 $8,300 is used to repay loans at month-end. The cash balance on July 1 is $8,700, 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 Add: Cash receipts Total cash available Less: Cash payments for Interest on loan July $ 24,300 28,450 Total cash payments Preliminary cash balance 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.) Loan activity Additional loan (loan repayment) Ending cash balance August $ 32,300 30,300 Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month KARIM CORP. Cash Budget $ September $ 40,300 32,300 July Loan balance $ 8,700 0 0 August September 0

Karim Corporation requires a minimum $8,300 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 $8,300 is used to repay loans at month-end. The cash balance on July 1 is $8,700, 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 Add: Cash receipts Total cash available Less: Cash payments for Interest on loan July $ 24,300 28,450 Total cash payments Preliminary cash balance 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.) Loan activity Additional loan (loan repayment) Ending cash balance August $ 32,300 30,300 Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month KARIM CORP. Cash Budget $ September $ 40,300 32,300 July Loan balance $ 8,700 0 0 August September 0

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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None
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