Cash Budget & Short-Term Financing Presented below are partial October, November

Question

Cash Budget & Short-Term Financing Presented below are partial October, November, and December cash budgets for Holidays Events. Loans are obtained in increments of $1,000 at the start of each month to maintain a minimum end-of-month balance of $12,000. Interest is one percent simple interest (no compounding) per month, payable when the loan is repaid. Repayments are made as soon as possible, subject to the minimum end-of-month balance Complete the short-term financing section of the cash budget and all missing figures. Use a negative sign with answers to indicate a cash disbursement. HOLIDAY EVENTS Partial Cash Budgets For the Months of October, November, and December October November December Total $12,000 $12,000 $47,000 Cash balance, beginning $23,000 155,000 Collection on sales 35,000 40,000 80,000 58,000 52,000 92,000 202,000 Cash available for operations (150,000) Disbursements for operations (50,000) (60,000) (40,000) Ending cash before borrowings or replacements 8,000 (8,000) 52,000 52,000 Short-term finance: 4,000 20,000 24,000 New loans 24,000 24,000 Repayments 200 280 Interest $12,000 $12,000 $27,720 $51,720 Cash balance, ending

Explanation / Answer

October November December Total Cash balance, beginning 23000 12000 12000 23000 Collection on sales 35000 40000 80000 155000 Cash available for operations 58000 52000 92000 178000 Disbursements for operations -50000 -60000 -40000 -150000 Ending cash balance before borrowings or replacements 8000 -8000 52000 28000 Short term finance: New Loans 4000 20000 0 24000 Repayments 0 0 -24000 -24000 Interest 0 0 -520 -520 Cash balance, ending 12000 12000 27480 27480

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