I need to make a cash budget. I have most of it filled out, but need help with t

Question

I need to make a cash budget. I have most of it filled out, but need help with the interest expense and borrowing (repayment) sections. If you could show how you got the answers, that would be great! Thanks!

Final Project g. Haas borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $12.000 cash oushion. Prepare a cash budget. (Any repayments/shortage which should be indicated with a minus sign. Round your answers to nearest whole dollar amount. Cash Budget Novomber Beginning cash balance Plus: Cash receipts Cash available Less Payments 0 100,000 100,000 12,660 258,000 270,660 278.640 278.640 For inventory purchases For selling and administrative expenses Interest oxpense Purchase of store fixtures 164 167 43.300 2220 167 614 44,732 116 340 29 000 64.000 Total budgeted payments Payments minus receipts 309.340 209 687 212 346 Surplus (shortage) 209 340) 60.973 66.294 Financing activily 2 Borrowing ( 222.00 Ending cash balance S12 660 S 60373 S 66 294

Explanation / Answer

Borrowing for the month of November is 223,000** and for the month of December is 224,000.

** As mentioned in the question that Haas borrow funds in increment of 1000, i.e, for the month of November, borrowed funds will be 223,000 (222,000+1000) in increment by 1000 & in a case for December month it will be 224,000 (223,000+1000).

Interest expense for December month will be 2230** (223,000*1%).

** As specified in question that Haas pays interest of 1% per month on the last day of the month, i.e 1% of 223000.

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