Widmer Corp. requires a minimum $10,000 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). If the ending cash balance exceeds the minimum, the excess will be applied to repaying any outstanding loan balance. The cash balance on July 1 is $10,400. Cash receipts other than for loans received for July, August, and September are forecasted as $24,000, $32,000, and $40,000, respectively. Payments other than for loan or interest payments for the same period are planned at $28,000, $30,000, and $32,000, respectively at July 1, there are no outstanding loans.Required:Prepare a cash budget for July, August, and September.
What will be an ideal response?
| ? | July | August | September |
| Cash Balance: | ? | ? | ? |
| Balance (Beginning) …………… | $10,400 | $10,000 | $10,000 |
| Cash Receipts …………………… | 24,000 | 32,000 | 40,000 |
| Cash Payments ………………… | (28,000) | (30,000) | (32,000) |
| Interest paid ……………………… | 0 | (36)* | (16)** |
| Preliminary Balance ……………… | $ 6,400 | $11,964 | $17,984 |
| Loan ……………………………… | 3,600 | 0 | 0 |
| Repaid …………………………… | 0 | (1,964) | (1,636) |
| Balance (Ending) ………………… | $10,000 | $10,000 | $16,348 |
** ($3,600 - $1,964) ? 1% = $16
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