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Q. 20-21E

Financial & Managerial Accounting
Found in: Page 920
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Foyert Corp. requires a minimum $30,000 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 monthend. The cash balance on October 1 is $30,000, and the company has an outstanding loan of $10,000. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow. Prepare a cash budget for October, November, and December. (Round interest payments to the nearest whole dollar.)

The ending cash balance for the month of October, November and December will be $30,000, $30,000 and $34,546.

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Step by Step Solution

Cash budget

Foyert Corp

Cash budget

For the month of October, November and December





Beginning cash balance




Add: Cash receipts




Total cash available




Cash disbursements




Interest on bank loan




Preliminary cash balance




Additional loan




Ending cash balance




Working notes

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