Karim corp. requires a minimum $8,000 cash balance. if necessary,
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Karim corp. requires a minimum $8,000 cash balance. if necessary,
Karim Corp. requires a minimum $8,000 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $8,400 and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) are:
July
August
September
Cash receipts
$
20,000
$
26,000
$
40,000
Cash disbursements
28,000
30,000
22,000
Prepare a cash budget for July, August, and September.