Ch$.22$ Homework i

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Motors Corporation manufactures motors for dirt bikes. The company requires a minimum $\backslash (\backslash$$ $30,000\backslash )$ cash balance at each month$-$end. If necessary, the company borrows to meet this requirement at a cost of $\backslash (3\backslash \%\backslash )$ interest per month $($paid at the end of each month$).$ Any preliminary cash balance above $\backslash (\backslash$$ $30,000\backslash )$ at month$-$end is used to repay loans. The cash balance on July $1$ is $\backslash (\backslash$$ $25,000\backslash ),$ and the company has no outstanding loans. Budgeted cash receipts and budgeted cash payments $($other than for interest on the loan and loan activity$)$ follow.

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$\backslash$begin$\{$tabular$\}\{$lrrr$\}$

& July & August & September $\backslash \backslash$

Cash receipts & $\backslash (\backslash$$ $76,000\backslash )$ & $\backslash (\backslash$$ $102,000\backslash )$ & $\backslash (\backslash$$ $141,000\backslash )\backslash \backslash$

Cash payments & $104,000$ & $90,900$ & $118,400$

$\backslash$end$\{$tabular$\}$

Prepare a cash budget for July, August, and September.

Note: Negative balances and Loan repayment amounts $($if any$)$ should be indicated with minus sign. Round your final answers to the nearest whole dollar.

$\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$c$|\}\{$MOTORS CORPORATION$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$c$|\}\{$Cash Budget$\}\backslash \backslash$

$\backslash$hline & July & $\backslash$multicolumn$\{2\}\{|$r$|\}\{$August$\}$ & $\backslash$multicolumn$\{2\}\{|$l$|\}\{$September$\}\backslash \backslash$

$\backslash$hline Beginning cash balance & $\backslash$$ $25,000$ & $\backslash$$ & $30,000$ & $\backslash$$ & $8,100\backslash \backslash$

$\backslash$hline Add: Cash receipts & $76,000$ & & $102,000$ & & $141,000\backslash \backslash$

$\backslash$hline Total cash available & $101,000$ & & $132,000$ & & $149,100\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$l$|\}\{$Less: Cash payments for$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$l$|\}\{$All items excluding interest$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$l$|\}\{$Interest on loan$\}\backslash \backslash$

$\backslash$hline Total cash payments & $0$ & & $0$ & & $0\backslash \backslash$

$\backslash$hline Preliminary cash balance & $101,000$ & & $132,000$ & & $149,100\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$l$|\}\{$Additional loan $($loan repayment$)\}\backslash \backslash$

$\backslash$hline Ending cash balance & $\backslash$$ $101,000$ & $\backslash$$ & $132,000$ & $\backslash$$ & $149,100\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$l$|\}\{$Loan activity$\}\backslash \backslash$

$\backslash$hline Loan balance, beginning of Month & & $\backslash$$ & $0$ & $\backslash$$ & $0\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$l$|\}\{$Additional loan $($loan repayment$)\}\backslash \backslash$

$\backslash$hline Loan balance, end of month & $\backslash$$ $0$ & $\backslash$$ & $0$ & $\backslash$$ & $0\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$