Mike's Motors Corp. manufactures motors for dirt bikes. The company requires a minimum $30,000 cash balance at each month-end. If necessary, the company borrows to meet this requirement, at a cost of 2% interest per month (paid at the end of each month). Any cash balance above $30,000 at month-end is used to repay loans. The cash balance on July 1 is $42,000, and the company has no outstanding loans at that time. Forecasted cash recelpts and forecasted cash payments (other than for loan activity) are as follows. Cash Cash July August September Receipts S 93,000 119,000 158,000 Payments $121, 000 107,900 135,400 Prepare a cash budget for July, August, and September. (Negatlve balances and Loan repayment amounts (If any) should be Indicated with minus sign. Round your final answers to the nearest whole dollar.) Answer is complete but not entirely correct. MIKE'S MOTORS CORP. Cash Budget For July, August, and September July August September S 42,000 s 30,000 Beginning cash balance Cash receipts Total cash available Cash payments Interest expense Preliminary cash balance Additional loan (loan rерayment) Ending cash balance 30,000 93,000 119,000 158,000 135,000 149,000 188,000 121,000 107,900 135,400 320 98 14,000 40,780 52,502 16,000 O (11,100) 8 s 30,000 (4,900) s 29,680 47,602 Loan balance Beginning cash balance Additional loan (loan гераyment) S 16,000 4,900 16,000 (11,100) (4,900) I nan halance Month-end Is 16 000 4 900
Mike's Motors Corp. manufactures motors for dirt bikes. The company requires a minimum $30,000 cash balance at each month-end. If necessary, the company borrows to meet this requirement, at a cost of 2% interest per month (paid at the end of each month). Any cash balance above $30,000 at month-end is used to repay loans. The cash balance on July 1 is $42,000, and the company has no outstanding loans at that time. Forecasted cash recelpts and forecasted cash payments (other than for loan activity) are as follows. Cash Cash July August September Receipts S 93,000 119,000 158,000 Payments $121, 000 107,900 135,400 Prepare a cash budget for July, August, and September. (Negatlve balances and Loan repayment amounts (If any) should be Indicated with minus sign. Round your final answers to the nearest whole dollar.) Answer is complete but not entirely correct. MIKE'S MOTORS CORP. Cash Budget For July, August, and September July August September S 42,000 s 30,000 Beginning cash balance Cash receipts Total cash available Cash payments Interest expense Preliminary cash balance Additional loan (loan rерayment) Ending cash balance 30,000 93,000 119,000 158,000 135,000 149,000 188,000 121,000 107,900 135,400 320 98 14,000 40,780 52,502 16,000 O (11,100) 8 s 30,000 (4,900) s 29,680 47,602 Loan balance Beginning cash balance Additional loan (loan гераyment) S 16,000 4,900 16,000 (11,100) (4,900) I nan halance Month-end Is 16 000 4 900
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Mike's Motors Corp. manufactures motors for dirt bikes. The company requires a minimum $30,000 cash balance at each month-end.
If necessary, the company borrows to meet this requirement, at a cost of 2% interest per month (paid at the end of each month). Any
cash balance above $30,000 at month-end is used to repay loans. The cash balance on July 1 is $42,000, and the company has no
outstanding loans at that time. Forecasted cash receipts and forecasted cash payments (other than for loan activity) are as follows.
Cash
Cash
Receipts
$ 93,000
July
August
September
Payments
$121,000
107,900
135,400
119,000
158,000
Prepare a cash budget for July, August, and September. (Negatlve balances and Loan repayment amounts (If any) should be
Indicated with mlnus sign. Round your final answers to the nearest whole dollar.)
Answer is complete but not entirely correct.
MIKE'S MOTORS CORP.
Cash Budget
For July, August, and September
July
August
September
S 30,000
Beginning cash balance
Cash receipts
Total cash available
$ 42,000
30,000
93,000
119,000
158,000
135,000
149,000
188,000
Cash payments
121,000
107,900
135,400
Interest expense
320
98
Preliminary cash balance
Additional loan (loan
rераyment)
Ending cash balance
14,000
40,780
52,502
16,000
(11,100)
(4,900)
S 30,000
S 29,680
47,602
Loan balance
Beginning cash balance
Additional loan (loan
rераyment)
Loan balance, Month-end
S 16,000
IS
4,900
16,000
(11,100)
(4,900)
$ 16,000
IS
4,900
IS
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