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McIntyre, Inc. has prepared its third quarter budget and provided the following data:JulAugSepCash ...

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McIntyre, Inc. has prepared its third quarter budget and provided the following data:JulAugSepCash ...

McIntyre, Inc. has prepared its third quarter budget and provided the following data:

   Jul   Aug   Sep
Cash collections   $50,000   $39,900   $46,000
Cash payments:
Purchases of direct materials   31,000   22,000   17,500
Operating expenses   12,200   8,700   11,300
Capital expenditures   13,600   24,300   0

The cash balance on June 30 is projected to be $4,500. 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. Calculate the final projected cash balance at the end of August taking into consideration all the financing transactions.
A) $(7,442)
B) $47,600
C) $7,558
D) $15,000

Textbook

Horngren's Financial & Managerial Accounting, The Financial Chapters

Edition: 5^th

Authors: Miller-Nobles, Mattison, Matsumura

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