Question 7

Mike's Motors Corp. manufactures motors for dirt bikes. The company requires a minimum $30,000 cash balance at each month-end. If necessary, the company borrows to meet this requirement at a cost of 2% Interest per month (paid at the end of each month). Any cash balance above $30.000 at month-end is used to repay loans. The cash balance on July 1 is $42,000, and the company has no outstanding loans at that time. Forecasted cash receipts and forecasted cash payments (other than for loan activity) are as follows. July August September Cash Receipts $ 93,000 119,000 153,000 Cash Payments $121,000 107,900 135,400 Prepare a cash budget for July August, and September (Negative balances and Loon repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar) MIKE'S MOTORS CORP. Cash Budget For July, August, and September July August September Total cash available Preliminary cash balance Ending cash balance Loan balance Loan balance, Month-end