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

   Jul   Aug   Sep
Cash collections   $51,000   $39,500   $46,600
Cash payments:         
Purchases of direct materials   31,000   21,500   17,000
Operating expenses   12,000   9,000   11,300
Capital expenditures   13,500   24,600   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 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 final projected cash balance at the end of September.
A) $21,584
B) $6,584
C) $54,967
D) $8,367
Textbook 
Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
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7 years ago
This was certainly a tough question, loving the expertise
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