You are provided with the following information taken from Moynahan Inc.'s March 31, 2017, balance sheet. Cash........................................................................$

Question:

You are provided with the following information taken from Moynahan Inc.'s March 31, 2017, balance sheet.
Cash........................................................................$ 11,000
Accounts receivable.........................................................20,000
Inventory.....................................................................36,000
Property, plant, and equipment, net of depreciation..................120,000
Accounts payable...........................................................22,400
Common stock............................................................150,000
Retained earnings..........................................................11,600
Additional information concerning Moynahan Inc. is as follows.
1. Gross profit is 25% of sales.
2. Actual and budgeted sales data
March (actual)...................$46,000
April (budgeted)..................70,000
3. Sales are both cash and credit. Cash collections expected in April are:
March......................$18,400................(40% of $46,000)
April.........................42,000................(60% of $70,000)
..............................$60,400....................................
4. Half of a month's purchases are paid for in the month of purchase and half in the following month. Cash disbursements expected in April are:
Purchases March......................$22,400
Purchases April.........................28,100
..........................................$50,500
5. Cash operating costs are anticipated to be $11,200 for the month of April.
6. Equipment costing $2,500 will be purchased for cash in April.
7. The company wishes to maintain a minimum cash balance of $9,000. An open is available at the bank. All borrowing is done at the beginning of the month, and all repayments are made at the end of the month. The interest rate is 12% per year, and interest expense is accrued at the end of the month and paid in the following month.
Instructions
Prepare a for the month of April. Determine how much cash Moynahan Inc. must borrow, or can repay, in April.
Cash Budget
A cash budget is an estimation of the cash flows for a business over a specific period of time. These cash inflows and outflows include revenues collected, expenses paid, and loans receipts and payment. Its primary purpose is to provide the... Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...