7.

Karim Corp. requires a minimum $8,200 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 $8,600 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) follow.

	July			August			September
Cash receipts	$	24,200		$	32,200		$	40,200
Cash payments		28,300			30,200			32,200

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.)

KARIM CORP.
Cash Budget
For July, August, and September
	July	August	September
Beginning cash balance	$8,600
Total cash available
Preliminary cash balance
Ending cash balance
Loan balance
Loan balance - Beginning of month	$0
Additional loan (loan repayment)
Loan balance - End of month

8.

Use the following information to prepare the September cash budget for PTO Manufacturing Co. The following information relates to expected cash receipts and cash payments for the month ended September 30.

Beginning cash balance, September 1, $41,000.

Budgeted cash receipts from sales in September, $262,000.

Raw materials are purchased on account. Purchase amounts are: August (actual), $71,000, and September (budgeted), $103,000. Payments for direct materials are made as follows: 65% in the month of purchase and 35% in the month following purchase.

Budgeted cash payments for direct labor in September, $31,000.

Budgeted depreciation expense for September, $3,000.

Other cash expenses budgeted for September, $56,000.

Accrued income taxes payable in September, $10,700.

Bank loan interest payable in September, $1,700.

PTO MANUFACTURING COMPANY
Cash Budget
For Month Ended September 30
Beginning cash balance
Cash receipts from sales
Total cash available		$0
Cash payments for:
Direct materials
Direct labor
Other expenses
Accrued taxes
Interest on bank loan
Total cash payments		0
Ending cash balance		$0