Question

Foyert Corp. requires a minimum $7,900 cash balance. If necessary, loans are taken to meet this...

Foyert Corp. requires a minimum $7,900 cash balance. If necessary, loans are taken to meet this requirement at a cost of 2% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on October 1 is $7,900 and the company has an outstanding loan of $3,900. 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 $ 23,900 $ 17,900 $ 21,900
Cash payments 26,850 16,900 14,100


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.)

  
FOYERT CORP.
Cash Budget
For October, November, and December
October November December
Beginning cash balance $7,900
Total cash available
Preliminary cash balance
Ending cash balance
Loan balance
Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance - End of month

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Answer #1
FOYERT CORPORATION
CASH BUDGET
FOR OCTOBER, NOVEMBER AND DECEMBER
OCTOBER NOVEMBER DECEMBER
Beginning Cash Balance 7900 7900 7900
Add: Expected receipts 23900 17900 21900
Total cash available 31800 25800 29800
Less: Expected payments 26850 16900 14100
Less: Interest on loan 78 139 121
(3900*2%) (6928*2%) (6067*2%)
Preliminary cash balance 4872 8761 15579
Add: Additional loan/(repayment) 3028 -861 -6067
Ending Cash balance 7900 7900 9512
Loan balance
Loan balance-beginning of month 3900 6928 6067
Additional loan/(Repayment) 3028 -861 -6067
Loan Balance -End of month 6928 6067 0
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