Financial Managerial Accounting: E22-30 Harley Company requires a minimum cash balance

Financial Managerial Accounting
E22-30 Preparing the financial budget - cash budget
Harley Company requires a minimum cash balance of $5,000. When the company expects a cash deficiency, it borrows the exact amount required on the first of the month. Expected excess cash is used to repay any amounts owed. Interest owed from the previous month’s principal balance is paid on the first of the month at 12% per year. The company has already completed the budgeting process for the first quarter for cash receipts and cash payments for all expenses except interest. Harley does not have any outstanding debt on January 1.
Complete the cash budget for the first quarter for Harley Company. Round interest expense to the nearest whole dollar.
Harley Company
Cash Budget
For the Three Months Ended March 31
January February March Total
Beginning balance 5,000 - - 5,000
Cash receipts 18,000 26,000 40,000 84,000
Cash available 23,000 26,000 40,000 89,000
Cash payments:
All expenses except interest 35,000 30,000 32,000 97,000
Interest expense - -
Total cash payments 35,000 30,000 32,000 97,000

Ending balance before financing -
Minimum cash balance desired (5,000) (5,000) (5,000) (15,000)
Projected cash excess (deficiency)
Borrowing -
Principal repayments -
Total effects of financing - - - -
Ending cash balance $- $- $-
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