Karim Corporation requires a minimum $9,600 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 $9,600 is used to repay loans at month-end. The cash balance on July 1 Is $10,000, 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 $ 25,600 30,400 Beginning cash balance Add: Cash receipts 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 $ 33,600 31,600 Loan balance - Beginning of month Additional loan (loan repayment) Loan balance End of month September $ 41,600 33,600 KARIM CORPORATION Cash Budget $ July Loan balance $ 10,000 $ 25,600 35,600 0 0 August 9,000 $ 33,600 43,200 September 0 9,600 41,000 51,200 0

Karim Corporation requires a minimum $9,600 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 $9,600 is used to repay loans at month-end. The cash balance on July 1 Is $10,000, 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 $ 25,600 30,400 Beginning cash balance Add: Cash receipts 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 $ 33,600 31,600 Loan balance - Beginning of month Additional loan (loan repayment) Loan balance End of month September $ 41,600 33,600 KARIM CORPORATION Cash Budget $ July Loan balance $ 10,000 $ 25,600 35,600 0 0 August 9,000 $ 33,600 43,200 September 0 9,600 41,000 51,200 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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