Item$3$

$25$

points

Item $3$

The following schedule shows the excess of cash receipts over cash disbursements projected for the Zeena Company for $2021$:

Q$1$ Q$2$ Q$3$ Q$4$ Year

Excess $($deficiency$)$ of cash available over disbursements $ $(127,300)$ $ $(45,680)$ $ $131,780$ $ $46,300$ $ $5,100$

The company borrows and repays from an open line of credit in round $$100$ amounts. Loan related payments are made in periods when cash is available with interest paid on only the portion of any principal being repaid. The current balance $($principal plus accrued interest$)$ in the line of credit account is $$2,808$ for the borrowing that occurred in the last quarter of the previous year. The annual interest rate is $16\%.$ A minimum cash reserve of $$600$ must be maintained each quarter. The opening balance for the year is expected to be $$1,180.$

Required:

Prepare a cash budget assuming that terms of borrowing require payment of principal after four quarters have elapsed since receiving a loan, and that interest is accrued until then and repaid along with the principal. What interest expense and interest payable will be reported on the income statement for the year? Any borrowing will take place at the beginning of a quarter, and any repayments will be made at the end of a quarter. $($Any "Repayments", "Interest" and "Deficiency of cash" should be indicated by a minus sign.$)$