Foyert Corp. requires a minimum $7,600 cash balance. If necessary, loans are taken to meet this...

Foyert Corp. requires a minimum $7,600 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on October 1 is $7,600 and the company has an outstanding loan of $3,600. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow.

	October		November		December
Cash receipts	$	23,600	$	17,600	$	21,600
Cash payments		26,400		16,600		14,400

Prepare a cash budget for October, November, and December. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.)

Expert Solution

	Oct	Nov	Dec
Beginning Cash Balance	$ 7,600	$ 7,600	$ 7,600
Cash receipts	$ 23,600	$ 17,600	$ 21,600
Total Cash available	$ 31,200	$ 25,200	$ 29,200
Cash payments	$ 26,400	$ 16,600	$ 14,400
Interest Expense	$ 36	$ 64	$ 55
Preliminary Cash balance	$ 4,764	$ 8,536	$ 14,745
Additional Loan (Loan repayment)	$ 2,836	$ (936)	$ (5,500)
Ending Cash balance	$ 7,600	$ 7,600	$ 9,245

Loan balance - Beginning of month	$ 3,600	$ 6,436	$ 5,500
Additional loan (repayment)	$ 2,836	$ (936)	$ (5,500)
Loan balance - End of month	$ 6,436	$ 5,500	$ -

ekkarill92 answered 2 years ago

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