Question
9. Temecula, Inc. budgets the following cash receipts and cash payments for the 3rd quarter of 2014: July August September Total Cash receipts $25,000 $24,000
9. Temecula, Inc. budgets the following cash receipts and cash payments for the 3rd quarter of 2014:
| July | August | September | Total |
Cash receipts | $25,000 | $24,000 | $41,000 | $90,000 |
Cash payments | 28,000 | 30,000 | 31,000 | 89,000 |
Cash flow | (3,000) | (6,000) | 10,000 | 1,000 |
The firm has $5,000 of cash on hand at the end of June, and
- Management budgets an ending cash balance of $5,000 at the end of each month.
- Temecula has arranged short-term borrowing from its bank as needed.
- The agreement requires Temecula to borrow in $1,000 increments at the beginning of the months needed.
- Interest is 6% annually
- Temecula will repay principal in thousand dollar increments plus accrued interest on all borrowings at the end of months when funds permit.
Required: complete Temeculas short-term financing budget for the third quarter by completing the following table.
| July | August | September | Total |
Beginning cash
| $5,000 |
|
| $5,000 |
Monthly cash flow
| (3,000) |
|
|
|
Net cash before financing
| 2,000 |
|
|
|
Borrowing
|
|
|
|
|
Repayment of borrowing
|
|
|
|
|
Interest payment
|
|
|
|
|
Ending cash
|
|
|
|
|
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