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1.) Dunder Mifflin Paper Company has hired you as a consultant to help prepare the cash budget for the quarter ending June 30th, 2022 and
1.) Dunder Mifflin Paper Company has hired you as a consultant to help prepare the cash budget for the quarter ending June 30th, 2022 and answer a few questions. | |||||||||
Michael Scott tells you that: | |||||||||
Beginning cash balance April 1st is $74,000. | |||||||||
Green Company has an advertising contract of $200,000 per month. | |||||||||
Green Company pays $18,000 each month for rent, $7,000 for utilities and $106,000 for salaries. | |||||||||
Green Company pays sales commissions to its sales staff of 4% of sales, above their regular salaries. | |||||||||
Green Company will pay a yearly $15,000 dividend in the month of April. | |||||||||
Green will purchase $16,000 of equipment in May and $40,000 in June. | |||||||||
Green must maintain a minimum cash balance of $50,000 each month. | |||||||||
All borrowing is done at the beginning of the month, and any repayments are made at the end of the month. | |||||||||
The interest rate on borrowings is 10% per year, and interest accrues monthly. | |||||||||
Interest must be paid when borrowings are repaid. |
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