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IS. A cash budget for the first three quarters of a retail company is given below (000 omited). The company requires a eniaimum cash balance
IS. A cash budget for the first three quarters of a retail company is given below (000 omited). The company requires a eniaimum cash balance of at least $5,000 to start each quarter. If necessary, the company will borrow money from its bank to maintain this balance. The company will pay no interest in Quarters i, 2, and 3. It will repay as much of its borrow ings as possible as soon as it has more than $5,000 in cash in a given quarter. Suppose the company starts the first quarter with no hank debt. How much total bank debt does the company expect to have at the end of the third quarter? 59 Cash balance, beginning 126 90 Add collections from customers Total cash available Less disbursements 54 64 65 Purchase of inventory 39 45 Selling and administrative expenses 48 Equipment purchases Total d Excess (deficiency) of cash available over disbursements Financing Repayments Total financing Cash balance, ending a $45,000 b. $41,000 c $39,000 d. $37,000 e. None of the above
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