Karim Corporation requires a minimum $8,300 cash balance. Loans taken to meet this requirement cost 2% interest per month (paid at the end of each month). Any preliminary cash balance above $8,300 is used to repay loans at month-end. The cash balance on July 1 is $8,700, and the company has no outstanding loans. Budgeted cash receipts (other than for loans received) and budgeted cash payments (other than for loan or interest payments) follow. Cash receipts Cash payments Beginning cash balance Add: Cash receipts Total cash available Less: Cash payments for Interest on loan July $ 24,300 28,450 Total cash payments Preliminary cash balance Prepare a cash budget for July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) Loan activity Additional loan (loan repayment) Ending cash balance August $ 32,300 30,300 Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month KARIM CORP. Cash Budget $ September $ 40,300 32,300 July Loan balance $ 8,700 0 0 August September 0

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Karim Corporation requires a minimum $8,300 cash balance. Loans taken to meet this requirement cost
2% interest per month (paid at the end of each month). Any preliminary cash balance above $8,300 is
used to repay loans at month-end. The cash balance on July 1 is $8,700, and the company has no
outstanding loans. Budgeted cash receipts (other than for loans received) and budgeted cash
payments (other than for loan or interest payments) follow.
Cash receipts
Cash payments
Beginning cash balance
Add: Cash receipts
Total cash available
Less: Cash payments for
Interest on loan
July
$ 24,300
28,450
Prepare a cash budget for July, August, and September. (Negative balances and Loan repayment
amounts (if any) should be indicated with minus sign. Round your final answers to the nearest
whole dollar.)
Total cash payments
Preliminary cash balance
Loan activity
Additional loan (loan repayment)
Ending cash balance
August
$ 32,300
30,300
Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance - End of month
KARIM CORP.
Cash Budget
$
September
$ 40,300
32,300
July
Loan balance
$
8,700
0
0
August
0
September
0
Transcribed Image Text:Karim Corporation requires a minimum $8,300 cash balance. Loans taken to meet this requirement cost 2% interest per month (paid at the end of each month). Any preliminary cash balance above $8,300 is used to repay loans at month-end. The cash balance on July 1 is $8,700, and the company has no outstanding loans. Budgeted cash receipts (other than for loans received) and budgeted cash payments (other than for loan or interest payments) follow. Cash receipts Cash payments Beginning cash balance Add: Cash receipts Total cash available Less: Cash payments for Interest on loan July $ 24,300 28,450 Prepare a cash budget for July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) Total cash payments Preliminary cash balance Loan activity Additional loan (loan repayment) Ending cash balance August $ 32,300 30,300 Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month KARIM CORP. Cash Budget $ September $ 40,300 32,300 July Loan balance $ 8,700 0 0 August 0 September 0
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