Funds are as sumed to be borrowed and repaid on the

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desires to maintain a cash cushion of $14,000 at the end of each month. Funds are as- sumed to be borrowed and repaid on the last day of each month. Interest is charged at the rate of 2 percent per month. a. Complete the cash budget by filling in the missing amounts. Round all computa- tions to the nearest whole dollar. Cash budget July August September Cash Receipts Beginning cash balance $42,500 14,000 Add cash receipts 180,000 200,000 240,600 Total cash available 222,500 214,000 Cash payments For inventory 165,525 140,230 174,152 For selling & admin 54,000 60,560 61,432 For interest expense 0 231*** Total cash payments 220,026 201,021 Financing Surplus (shortage) 2474 214,000 – 201,021 = 12,979 Borrowing (repayments) 11,526 1,021 Ending Cash Balance 14,000 14,000 14,000 Interest = last month’s borrowing * interest ate = 11,526 * .02 = 231*** Simple cash budget too: Beginning cash 10,000 Estimated receipts 100,000 Estimated payments 102,000 Min cash balance 10,000 How much do I need to borrow? 10,000 + 100,000 – 102,000 = 8,000 So I borrow 2,000 14-4
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