Karim Corporation requires a minimum $9,500 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 $9,500 is used to repay loans at month-end. The cash balance on July 1 is $9,900, 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 $ 25,500 30,250 August $ 33,500 31,500 September $ 41,500 33,500 Prepare a cash budget for July, August, and September. Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar. Beginning cash balance Add: Cash receipts Total cash available es Less: Cash payments for Interest on loan All items excluding interest Total cash payments Preliminary cash balance Loan activity Additional loan (loan repayment) Ending cash balance Loan balance - Beginning of month Additional loan (loan repayment) KARIM CORPORATION Cash Budget July August September $ 9,900 $ 9,500 $ 9,500 25,500 33,500 41,500 35,400 43,000 51,000 0 0 0 0 $ 5,150 4,350 (1,913) (2,437) $ 9,500 $ 9,500 $ 15,014 Loan balance $ 0 $ 4.350 4,350 (1.913) 2,437 (2.437)|
Karim Corporation requires a minimum $9,500 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 $9,500 is used to repay loans at month-end. The cash balance on July 1 is $9,900, 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 $ 25,500 30,250 August $ 33,500 31,500 September $ 41,500 33,500 Prepare a cash budget for July, August, and September. Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar. Beginning cash balance Add: Cash receipts Total cash available es Less: Cash payments for Interest on loan All items excluding interest Total cash payments Preliminary cash balance Loan activity Additional loan (loan repayment) Ending cash balance Loan balance - Beginning of month Additional loan (loan repayment) KARIM CORPORATION Cash Budget July August September $ 9,900 $ 9,500 $ 9,500 25,500 33,500 41,500 35,400 43,000 51,000 0 0 0 0 $ 5,150 4,350 (1,913) (2,437) $ 9,500 $ 9,500 $ 15,014 Loan balance $ 0 $ 4.350 4,350 (1.913) 2,437 (2.437)|
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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Transcribed Image Text:Karim Corporation requires a minimum $9,500 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 $9,500 is used to repay loans at month-end. The cash balance on July 1
is $9,900, 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
$ 25,500
30,250
August
$ 33,500
31,500
September
$ 41,500
33,500
Prepare a cash budget for July, August, and September.
Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to
the nearest whole dollar.
Beginning cash balance
Add: Cash receipts
Total cash available
es
Less: Cash payments for
Interest on loan
All items excluding interest
Total cash payments
Preliminary cash balance
Loan activity
Additional loan (loan repayment)
Ending cash balance
Loan balance - Beginning of month
Additional loan (loan repayment)
KARIM CORPORATION
Cash Budget
July
August
September
$
9,900 $
9,500 $
9,500
25,500
33,500
41,500
35,400
43,000
51,000
0
0
0
0
$
5,150
4,350
(1,913)
(2,437)
$
9,500
$
9,500 $
15,014
Loan balance
$
0 $
4.350
4,350
(1.913)
2,437
(2.437)|
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