A cash budget for the first three quarters of a retail company is given below (000...

 

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A cash budget for the first three quarters of a retail company is given below (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. If necessary, the company will borrow monry from its bank to maintain this balance. The company will pay no interest in Quarters 1,2. and 3. It will repay as much of its borrowings as possible as soon as it has more than $5,000 in cash in a given quarter. Suppose the company starts the first quarter with no bank debt. How much total bank debt does the company expect to have at the end of the third quarter Cash balance, beginning 59 Add collections from customers 88 124 90 Total cash available Less disbursements: Purchase of inventory 54 64 65 Selling and administrative expenses 39 45 48 Equipment purchases 10 Dividends 2. Total disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments Total financing Cash balance, ending a. $41,000 b. $45,000 c. $37,000 d. $39,000 None of the above e. A cash budget for the first three quarters of a retail company is given below (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. If necessary, the company will borrow monry from its bank to maintain this balance. The company will pay no interest in Quarters 1,2. and 3. It will repay as much of its borrowings as possible as soon as it has more than $5,000 in cash in a given quarter. Suppose the company starts the first quarter with no bank debt. How much total bank debt does the company expect to have at the end of the third quarter Cash balance, beginning 59 Add collections from customers 88 124 90 Total cash available Less disbursements: Purchase of inventory 54 64 65 Selling and administrative expenses 39 45 48 Equipment purchases 10 Dividends 2. Total disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments Total financing Cash balance, ending a. $41,000 b. $45,000 c. $37,000 d. $39,000 None of the above e.

Answer rating: 100% (QA)

option c Cash budget Quarter 000 omitted 1 2 3 Cash bala... View the full answer