Question

Karim Corp. requires a minimum $9,600 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 $10,000, 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 $ 25,600 $ 33,600 $ 41,600 Cash payments 30,400 31,600 33,600 Prepare a cash budget for July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.)

KARIM CORP.
Cash Budget
For July, August, and September
	July	August	September
Beginning cash balance	$10,000		$9,600
Cash receipts			41,600
Total cash available			51,200
Cash payments
Interest on bank loan
Preliminary cash balance
Additional loan (loan repayment)
Ending cash balance
Loan balance
Loan balance - Beginning of month	$0
Additional loan (loan repayment)
Loan balance - End of month

Answer 1

KARIM CORP.
Cash Budget
For July, August, and September
	July	August	September
Beginning cash balance	10,000.00	9,600.00	9,600.00
Cash receipts	25,600.00	33,600.00	41,600.00
Total cash available	35,600.00	43,200.00	51,200.00
Cash payments	30,400.00	31,600.00	33,600.00
Interest on bank loan	-	44.00	24.44
Preliminary cash balance	5,200.00	11,556.00	17,575.56
Additional loan (loan repayment)	4,400.00	(1,956.00)	(2,444.00)
Ending cash balance	9,600.00	9,600.00	15,131.56
Loan balance
Loan balance - Beginning of month	-	4,400.00	2,444.00
Additional loan (loan repayment)	4,400.00	(1,956.00)	(2,444.00)
Loan balance - End of month	4,400.00	2,444.00	-