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 1 year ago

Karim Corp. requires a minimum $9,200 cash balance. If necessary, loans are taken to meet this...

Karim Corp. requires a minimum $9,200 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 July 1 is $9,600 and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow. July August September Cash Receipts $ 25,200 $...

Karim Corp. requires a minimum $8,200 cash balance. Loans taken to meet this requirement cost 1%...

Karim Corp. requires a minimum $8,200 cash balance. Loans taken to meet this requirement cost 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $8,600, and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow. July August September Cash receipts $ 24,200 $ 32,200 $ 40,200 Cash payments 28,300...

What is the annual opportunity cost of a checking account that requires a minimum balance of...

What is the annual opportunity cost of a checking account that requires a minimum balance of $240 to avoid service charges? Assume an interest rate of 2.5 percent. Round your answer to 2 decimal places.

The primary reason that managers impose a minimum cash balance in the cash budget is a....

The primary reason that managers impose a minimum cash balance in the cash budget is a. that it protects the organization from the uncertainty of the budgeting process. b. that it makes the financial statements look more appealing to creditors. c. because management needs discretionary cash for unforeseen business opportunities. d. managers lack discipline to control their spending.

Consider the following balance sheet (in $millions): Assets consisting of Cash of $2 and Loans of...

Consider the following balance sheet (in $millions): Assets consisting of Cash of $2 and Loans of $10; Liabilities consisting of Deposits of $8, Debt of $2 and Equity of $2 (Total Assets of $12). The average interest earned on the loans is 7% and the average cost of deposits is 6%. Rising interest rates are expected to reduce the deposits by $3 million. Borrowing more debt will cost the bank 6.5% in the short term. A. What will be the...

DavidAdvertising Trial Balance December 31, 2014 Account Title Dr. Cr. Cash $7,600 AccountsReceivable 7,200 Supplies 4,700...

DavidAdvertising Trial Balance December 31, 2014 Account Title Dr. Cr. Cash $7,600 AccountsReceivable 7,200 Supplies 4,700 PrepaidInsurance 3,600 Prepaid Rent 2,400 Equipment 24,000 Accumulateddepreciation-Equipment $6,500 Accounts Payable 4,400 Notes Payable 9,000 Unearned Revenue 3,600 Share Capital 20,000 Retained Earnings -0- Dividends 2,500 Service Revenue 14,000 Salaries Expense 5,200 Utilities Expense 300 $57,500 $57,500 $57500 After preparing the adjusting entries (given earlier), posting them and preparing an adjusted trial balance. •Instructions, from the adjusted trial balance: 5. Prepare the closing entries...

The following balances are taken from the Trial Balance of Alpha Corp as of December 31,...

The following balances are taken from the Trial Balance of Alpha Corp as of December 31, 2018: Cash $19,000 Accounts Receivable $ 8,000 Accounts Payable 5,500 Equipment 25,000 Interest Income 500 Prepaid Insurance 2,500 Accumulated Depreciation 10,000 Common Stock 20,000 Notes Payable (due in 2019) 7,000 Salaries Expense 28,000 Retained Earnings...

.Journal Entries for Purchases and Cash Payments: Note: One way to meet the 250-word minimum requirement...

.Journal Entries for Purchases and Cash Payments: Note: One way to meet the 250-word minimum requirement for your primary post is to define the new terms that you are using. Review the preparation of journal entries in the Demonstration problem on pp. 418-421 and the demonstration video in the Unit 5 Resources explaining the preparation of journal entries for purchase transactions. Once you understand how these journal entries are prepared, please select one transaction from Problem 11-11B, on page 433...

About a company's cash budget, whats the correct answer: A) the minimum cash balance has to...

About a company's cash budget, whats the correct answer: A) the minimum cash balance has to equal the ending cash balance B) Quarters 2 beggining cash balance is the end of the quarters 1 cumulative cash surplus C) ending cash balance + minimum cash balance is = to the cash surplus shown on a cash budget D) firms try to keep a zero cash balance at all times E) a cash deficiency indicates a need for at least a short...

Thomas Corp. has the following simplified balance sheet: Cash &

Thomas Corp. has the following simplified balance sheet: Cash $ 50,000 Current liabilities $125,000 Inventory 150,000 Accounts receivable 100,000 Long-term debt 175,000 Net fixed assets 200,000 Common equity 200,000 Total $500,000 Total $500,000 Cost of sales for the year totaled $600,000 and its gross profit is $200,000. The company president believes the company carries excess inventory. She would like the inventory turnover ratio to be 6 times and would use the cash that we free up from reducing the inventory...

Question