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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text: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
9,600
33,600
43,200
0
September
$
9,600
41,600
51,200
0
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