Flash Medical Supply began October with $ 10,200 cash. Management forecasts that collections from credit customers will be $ 11,800 in October and $ 15,800 in November. The business is scheduled to receive $ 6,000 cash on a business note receivable in October. Projected cash payments include inventory purchases ($ 10,800 in October and $ 14,900 in November) and operating expenses ($ 4,200 each month).
Flash Medical Supply’s bank requires an $ 11,000 minimum balance in the business’ checking account. At the end of any month when the account balance dips below $ 11,000, the bank automatically extends credit to the business in multiples of $ 2,000. The company borrows as little as possible and pays back loans in quarterly installments of $ 4,000 plus 3% interest on the entire unpaid principal. The first payment occurs three months after the loan.

Prepare Flash Medical Supply’s cash budget for October and November.

  • CreatedAugust 27, 2014
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