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Munoz Medical Clinic has budgeted the following cash flows: Cash receipts - $110,000 Cash payments For inventory purchases - $95,000 For S&A expenses - $36,000 For interest expense - $800 Munoz Medical had a cash balance of $13,000 on January 1. The company desires to maintain a cash cushion of $9,000. Funds are assumed to be borrowed and repaid on the last day of each month. How much does the company need to borrow at the end of January to maintain its cash cushion?

Munoz Medical Clinic has budgeted the following cash flows: Cash receipts - $110,000 Cash payments For inventory purchases - $95,000 For S&A expenses - $36,000 For interest expense - $800 Munoz Medical had a cash balance of $13,000 on January 1. The company desires to maintain a cash cushion of $9,000. Funds are assumed to be borrowed and repaid on the last day of each month. How much does the company need to borrow at the end of January to maintain its cash cushion?

FINANCIAL ACCOUNTING
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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Munoz Medical Clinic has budgeted the following cash flows: Cash receipts - $110,000 Cash payments For inventory purchases - $95,000 For S&A expenses - $36,000 For interest expense - $800 Munoz Medical had a cash balance of $13,000 on January 1. The company desires to maintain a cash cushion of $9,000. Funds are assumed to be borrowed and repaid on the last day of each month. How much does the company need to borrow at the end of January to maintain its cash cushion?
Transcribed Image Text:Munoz Medical Clinic has budgeted the following cash flows: Cash receipts - $110,000 Cash payments For inventory purchases - $95,000 For S&A expenses - $36,000 For interest expense - $800 Munoz Medical had a cash balance of $13,000 on January 1. The company desires to maintain a cash cushion of $9,000. Funds are assumed to be borrowed and repaid on the last day of each month. How much does the company need to borrow at the end of January to maintain its cash cushion?
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