The company wants to maintain at the end of each month a minimum bank balance of...

 

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The company wants to maintain at the end of each month a minimum bank balance of $500,000. In case the company has a deficiency of money or is not able to reach this minimum bank balance, the company can borrow from a line of credit at the rate of 12% per annum. All borrowing is considered to happen on the first day of the month, and repayments are on the last day of the month. All borrowings and repayments from the bank should be in multiples of $5,000. It pays interest monthly. The cash balance on June 30 is $184,000. The company has a Common Stock beginning balance of $135,858 and the Retained Earnings Beginning Balance $685,000 a) Prepare the income statement (illustration 10.15) b) Prepare the statement of financial position (Illustration 10.21) The company wants to maintain at the end of each month a minimum bank balance of $500,000. In case the company has a deficiency of money or is not able to reach this minimum bank balance, the company can borrow from a line of credit at the rate of 12% per annum. All borrowing is considered to happen on the first day of the month, and repayments are on the last day of the month. All borrowings and repayments from the bank should be in multiples of $5,000. It pays interest monthly. The cash balance on June 30 is $184,000. The company has a Common Stock beginning balance of $135,858 and the Retained Earnings Beginning Balance $685,000 a) Prepare the income statement (illustration 10.15) b) Prepare the statement of financial position (Illustration 10.21)

Answer rating: 100% (QA)

a Income Statement Assuming the income statement covers the period from July 1 to June 30 and we have the following information Cash balance on June 3... View the full answer