Gary King has been working on Waterway Paints' cash budget for the coming year. Based on...
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Gary King has been working on Waterway Paints' cash budget for the coming year. Based on his projections for March, the beginnin cash balance will be $41,700; cash collections will be $590,000; and cash disbursements will be $624,000. Waterway Paints desires to maintain a $38,000 minimum cash balance. The company has a 6% open line of credit with its bank, which provides short-term borrowings in $500 increments. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in $500 increments). When partial payments are made against the line of credit, accrued interest applicable to the full amount due through that date is paid along with the partial principal repayment. (a) How much will Waterway Paints need to borrow from the bank at the beginning of March? Waterway Paints should borrow 30500 (b) Waterway anticipates having a positive $20,000 net cash flow from April activities. How much of the line of credit from March can be repaid? How much interest will be repaid in April? Principal to be repaid 20000 Interest to be repaid 152.50 Gary King has been working on Waterway Paints' cash budget for the coming year. Based on his projections for March, the beginnin cash balance will be $41,700; cash collections will be $590,000; and cash disbursements will be $624,000. Waterway Paints desires to maintain a $38,000 minimum cash balance. The company has a 6% open line of credit with its bank, which provides short-term borrowings in $500 increments. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in $500 increments). When partial payments are made against the line of credit, accrued interest applicable to the full amount due through that date is paid along with the partial principal repayment. (a) How much will Waterway Paints need to borrow from the bank at the beginning of March? Waterway Paints should borrow 30500 (b) Waterway anticipates having a positive $20,000 net cash flow from April activities. How much of the line of credit from March can be repaid? How much interest will be repaid in April? Principal to be repaid 20000 Interest to be repaid 152.50
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1 Cash Balance Required at the end of March Balance at the beginning 41700 Add Cash Receipts 590000 ... View the full answer
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