Buster's had a beginning cash balance of $3,200 for the quarter.During the quarter,the firm had cash collections of $37,280,wages and other cash expenses of $16,800,payments on account of $19,658,and paid dividends of $1,500.The beginning short-term debt is $6,500 with a quarterly interest rate of 2 percent.The firm just adopted a new policy which sets the minimum cash balance to $500.At quarter end,the cumulative surplus (deficit)is _____ and the ending short-term debt is ________.

Question

Quizplus · Accepted Answer

Quarterly interest on debt = .02 × $6,500 = $130Funds available for debt repayment = $3,200 + 37,280 - 16,800 - 19,658 - 1,500 - 130 - 500 = $1,892Cumulative surplus (deficit)= $3,200 + 37,280 - 16,800 - 19,658 - 1,500 - 130 -1,892 - 500 = $0Ending short-term debt = $6,500 - 1,892 = $4,608

Buster's Had a Beginning Cash Balance of $3,200 for the Quarter.During