Assume DontonDonton Consulting began JanuaryJanuary with $14,000 cash. Management forecasts that cash receipts from credit customers...

Assume DontonDonton Consulting began JanuaryJanuary with $14,000 cash. Management forecasts that cash receipts from credit customers will be $45,000 in January and $49,500 in February. Projected cash payments include equipment purchases ($15,000 in January and $40,000 in February ) and selling and administrative expenses ($3,000 each month). Donton 's bank requires a $20,000 minimum balance in the firm's checking account. At the end of any month when the account balance falls below $ 20,000, the bank automatically extends credit to the firm in multiples of $5,000. Donton borrows as little as possible and pays back loans each month in $1,000 increments, plus 66 % interest on the entire unpaid principal. The first payment occurs one month after the loan.
Requirements
1. Prepare Donton Consulting's cash budget for January and February 2018.
2. How much cash will Donton borrow in February if cash receipts from customers that month total $39,500 instead of 49,500??

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

LaBouche Company had cash receipts from customers in 2017 of $142,000. Cash payments for operating expenses...

LaBouche Company had cash receipts from customers in 2017 of $142,000. Cash payments for operating expenses were $97,000. Kelly has determined that at January 1, accounts receivable was $13,000, and prepaid expenses were $17,500. At December 31, accounts receivable was $18,600, and prepaid expenses were $23,100. The operating expenses on the accrual basis are:

Cash at beginning of period $74 Cash receipts from customers O+ 215 Dividends paid 12 Dividends...

Cash at beginning of period $74 Cash receipts from customers O+ 215 Dividends paid 12 Dividends received 9 Interest paid 7 Issuance of stocks 75 Loans made to borrowers 65 Payments of dividends 30 Payments to vendors and payroll 155 Proceeds from short-term borrowing 22 Purchase of land 35 Receipts of interest 10 Redemption of long term liabilities 80 Sale of building 26 Taxes paid 15 Please fill in codes: ) +, O -,I +, I-, F +, F- Calculate:...

Vernon Construction Company began operations on January 1, 2019, when it acquired $14,000 cash from the...

Vernon Construction Company began operations on January 1, 2019, when it acquired $14,000 cash from the issuance of common stock. During the year, Vernon purchased $2,500 of direct raw materials and used $2,400 of the direct materials. There were 106 hours of direct labor worked at an average rate of $6 per hour paid in cash. The predetermined overhead rate was $3.00 per direct labor hour. The company started construction on three prefabricated buildings. The job cost sheets reflected the...

OfficeMart Inc. has "cash and carry" customers and credit customers. OfficeMart estimates that 30% of monthly sales are to cash customers, while the remaining sales are to credit customers.

Schedule of Cash Collections of Accounts Receivable OfficeMart Inc. has "cash and carry" customers and credit customers. OfficeMart estimates that 30% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 20% pay their accounts in the month of sale, while the remaining 80% pay their accounts in the month following the month of sale. Projected sales for the next three months are as follows: October $114,000 November 143,000 December...

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments...

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. Cash Receipts Cash payments January $ 522,000 $ 466,600 February 411,500 356,100 March 472,000 529,000 According to a credit agreement with its bank, Kayak requires a minimum cash balance of $50,000 at each month-end. In return, the bank has agreed that the company can borrow up to...

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments...

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. Cash Receipts Cash payments January $ 523,000 $ 465,400 February 405,500 347,900 March 469,000 533,000 According to a credit agreement with its bank, Kayak requires a minimum cash balance of $40,000 at each month-end. In return, the bank has agreed that the company can borrow up to...

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments...

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. Cash Receipts Cash payments January $ 525,000 $ 475,000 February 400,000 350,000 March 450,000 525,000 According to a credit agreement with the company’s bank, Kayak promises to have a minimum cash balance of $30,000 at each month-end. In return, the bank has agreed that the company can...

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments...

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. Cash Receipts Cash payments January $ 524,000 $ 469,700 February 406,500 352,200 March 475,000 529,000 According to a credit agreement with the company’s bank, Kayak promises to have a minimum cash balance of $40,000 at each month-end. In return, the bank has agreed that the company can...

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments...

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. Cash Receipts Cash payments January $ 525,000 $ 468,500 February 410,000 353,500 March 482,000 524,000 According to a credit agreement with the company’s bank, Kayak promises to have a minimum cash balance of $40,000 at each month-end. In return, the bank has agreed that the company can...

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments...

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. Cash Receipts Cash payments January $ 521,000 $ 463,400 February 401,500 343,900 March 462,000 530,000 According to a credit agreement with the company’s bank, Kayak promises to have a minimum cash balance of $40,000 at each month-end. In return, the bank has agreed that the company can...

Subjects