The company provides the following information regarding the cash budget for next year: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Beginning cash balance $5,000 $5,000 $5,000 $5,000 Excess (Deficiency) ($3,000) $2,000 ($2,500) $1,000 The company's policy is to start each quarter with a cash balance of $5,000.The company has access to a line of credit in the amount of $50,000 for any short term borrowing needs and pays the loans off as quickly as possible.The company assumes the cash budget for the year will begins with no loans.What is the expected loan balance at the end of Quarter 2 (ignore interest)?
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.
The company provides the following information regarding the
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | |
| Beginning cash balance | $5,000 | $5,000 | $5,000 | $5,000 |
| Excess (Deficiency) | ($3,000) | $2,000 | ($2,500) | $1,000 |
The company's policy is to start each quarter with a cash balance of $5,000.
The company has access to a line of credit in the amount of $50,000 for any short term borrowing needs and pays the loans off as quickly as possible.
The company assumes the cash budget for the year will begins with no loans.
What is the expected loan balance at the end of Quarter 2 (ignore interest)?
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