A company has prepared its 3rd quarter budget and provided the following data:

The cash balance on June 30 is projected to be $4,000. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the final cash balance at the end of August taking into consideration all the financing transactions.

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Jul $50,000 Operating expenses Capital expenditures Aug Sep $40,000 $48,000 Cash collections Cash payments: Purchases of inventory 31,000 22,000 12,000 9,000 13,000 25,000 18,000 11,600 10 Jul $50,000 Operating expenses Capital expenditures Aug Sep $40,000 $48,000 Cash collections Cash payments: Purchases of inventory 31,000 22,000 12,000 9,000 13,000 25,000 18,000 11,600 10

Answer rating: 100% (QA)

Cash budget Jul Aug Sep Beginning cash balance 4000 8000 6958 Plus ... View the full answer