Cash Budget Prestige Hotels, Inc. Wishes to build a new hotel and desires to put aside a reserve of $80,000 each month for new capital expenditures. Company policy is to have at least 80,000 of cash balance at the end of each month. The company has a line of credit that requires borrowing and payments in increments of $1,000, the company pulls from the LOC on the last day of the month. Interest is also paid on the last day of the month Interest is 1% of the previous months outstanding balance. October Beginning cash balance is $0 Required: A. Prepare the cash budget using the cash receipt and disbursement schedules and the above information SOLUTION: A. Prestige Hotels, Inc. Cash Disbursement Schedule for the Three Months Ending December 31, 20Y1 October November December 0 Beginning Cash Balance Add Cash Receipts Cash Available for the Month 133,200 133,200 80,200 0 80,200 Cash Disbursements for Selling and Admin Exp Cash for Capital Expenditure reserves Cash for Interest payments Total Cash Disbursements (57,000) (80,000) 0 (137,000) (105,800) (80,000) (840) (186,640) Financing Surplus (Shortage) Borrowing (Repayment) Ending Cash Balance Ending LOC Balance (3,800) 84,000 80,200 84,000 Cash Budget Prestige Hotels, Inc. Wishes to build a new hotel and desires to put aside a reserve of $80,000 each month for new capital expenditures. Company policy is to have at least 80,000 of cash balance at the end of each month. The company has a line of credit that requires borrowing and payments in increments of $1,000, the company pulls from the LOC on the last day of the month. Interest is also paid on the last day of the month Interest is 1% of the previous months outstanding balance. October Beginning cash balance is $0 Required: A. Prepare the cash budget using the cash receipt and disbursement schedules and the above information SOLUTION: A. Prestige Hotels, Inc. Cash Disbursement Schedule for the Three Months Ending December 31, 20Y1 October November December 0 Beginning Cash Balance Add Cash Receipts Cash Available for the Month 133,200 133,200 80,200 0 80,200 Cash Disbursements for Selling and Admin Exp Cash for Capital Expenditure reserves Cash for Interest payments Total Cash Disbursements (57,000) (80,000) 0 (137,000) (105,800) (80,000) (840) (186,640) Financing Surplus (Shortage) Borrowing (Repayment) Ending Cash Balance Ending LOC Balance (3,800) 84,000 80,200 84,000