Carol's Chocolate Company has prepared its third quarter budget and provided the following data: $$\begin{array} { | l | r | r | r | }
\hline &{ \text { Jul } } & { \text { Aug } } & { \text { Sep } } \
\hline \text { Cash collections } & \$ 49,000 & \$ 39,500 & \$ 47,200 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 30,000 & 21,900 & 18,000 \
\hline \text { Operating expenses } & 12,400 & 8400 & 11,400 \
\hline \text { Capital expenditures } & 13,400 & 24,200 & 0 \
\hline
\end{array}$$ The cash balance on June 30 is projected to be $4000.The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls.It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%.All financing transactions are assumed to take place at the end of the month.The loan balance should be repaid in increments of $5,000 whenever there is surplus cash.Calculate the ending projected cash balance before financing for August.

Question

Carol's Chocolate Company has prepared its third quarter budget and provided the following data: $$\begin{array} { | l | r | r | r | } 
\hline &{ \text { Jul } } & { \text { Aug } } & { \text { Sep } } \
\hline \text { Cash collections } & \$ 49,000 & \$ 39,500 & \$ 47,200 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 30,000 & 21,900 & 18,000 \
\hline \text { Operating expenses } & 12,400 & 8400 & 11,400 \
\hline \text { Capital expenditures } & 13,400 & 24,200 & 0 \
\hline
\end{array}$$ The cash balance on June 30 is projected to be $4000.The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls.It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%.All financing transactions are assumed to take place at the end of the month.The loan balance should be repaid in increments of $5,000 whenever there is surplus cash.Calculate the ending projected cash balance before financing for August.

Quizplus · Accepted Answer

The Answer of Carol's Chocolate Company has prepared its third quarter budget and provided the following data: $$\begin{array} { | l | r | r | r | } 
\hline &{ \text { Jul } } & { \text { Aug } } & { \text { Sep } } \
\hline \text { Cash collections } & \$ 49,000 & \$ 39,500 & \$ 47,200 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 30,000 & 21,900 & 18,000 \
\hline \text { Operating expenses } & 12,400 & 8400 & 11,400 \
\hline \text { Capital expenditures } & 13,400 & 24,200 & 0 \
\hline
\end{array}$$ The cash balance on June 30 is projected to be $4000.The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls.It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%.All financing transactions are assumed to take place at the end of the month.The loan balance should be repaid in increments of $5,000 whenever there is surplus cash.Calculate the ending projected cash balance before financing for August.

Carol's Chocolate Company Has Prepared Its Third Quarter Budget and Provided