Tomo, Inc. has prepared its third quarter budget and provided the following data: Jul Aug Sep Cash collections $52,000 $39,600 $47,200 Cash payments: Purchases of direct materials 31,000 21,200 17,800 Operating expenses 12,500 8900 11,400 Capital expenditures 13,100 24,900 0 The cash balance on June 30 is projected to be $4300. 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 4%. 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. Calculate the final projected cash balance at the end of August taking into consideration all the financing transactions.
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.
Tomo, Inc. has prepared its third quarter budget and provided the following data:
Jul Aug Sep
Cash collections $52,000 $39,600 $47,200
Cash payments:
Purchases of direct materials 31,000 21,200 17,800
Operating expenses 12,500 8900 11,400
Capital expenditures 13,100 24,900 0
The cash balance on June 30 is projected to be $4300. 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 4%. 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. Calculate the final projected cash balance at the end of August taking into consideration all the financing transactions.
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