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7 years ago
Acme, Inc. has prepared its third quarter budget and provided the following data:

   Jul   Aug   Sep
Cash collections   $50,000   $39,600   $46,100
Cash payments:         
Purchases of direct materials   30,000   21,700   17,600
Operating expenses   12,300   8,000   11,600
Capital expenditures   13,700   24,300   0

The cash balance on June 30 is projected to be $4,100. 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 5%. 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. How much will the company have to borrow at the end of July?
A) $15,000
B) $5,000
C) $0
D) $10,000
Textbook 
Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
Authors:
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Deprecated Author
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#2
7 years ago
Will mark this subject solved, thanks
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4 years ago
tanks
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