Kennison, Inc. has prepared its third quarter budget and provided the following data: Aug Sep Jul $50,000 $39,500 $47,000 Cash collections Cash payments: Purchases of direct materials Operating expenses Capital expenditures 30,000 12,200 13,600 OA. $15,000 OB. $20,000 OC. $5,000 OD. $10,000 21,300 8,200 24,700 17,100 11,700 0 The cash balance on June 30 is projected to be $5,100. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. How much will the company have to borrow at the end of August?
Kennison, Inc. has prepared its third quarter budget and provided the following data: Aug Sep Jul $50,000 $39,500 $47,000 Cash collections Cash payments: Purchases of direct materials Operating expenses Capital expenditures 30,000 12,200 13,600 OA. $15,000 OB. $20,000 OC. $5,000 OD. $10,000 21,300 8,200 24,700 17,100 11,700 0 The cash balance on June 30 is projected to be $5,100. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. How much will the company have to borrow at the end of August?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Question
A2
Transcribed Image Text:Kennison, Inc. has prepared its third quarter budget and provided the following data:
Aug
Jul
$50,000
Sep
$39,500 $47,000
Cash collections
Cash payments:
Purchases of direct materials
Operating expenses
Capital expenditures
30,000
12,200
13,600
OA. $15,000
OB. $20,000
O C. $5,000
OD. $10,000
21,300
8,200
24,700
17,100
11,700
0
The cash balance on June 30 is projected to be $5,100. The company has to maintain a minimum
cash balance of $5,000 and is authorized to borrow at the end of each month to make up any
shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual
rate of 5%. All financing transactions are assumed to take place at the end of the month. The loan
balance should be repaid in increments of $5,000 whenever there is surplus cash. How much will the
company have to borrow at the end of August?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education