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Chang Company has budgeted the following cash flows: Chang had an $18,000 cash balance on April 1. The company desires a $30,000 cash cushion before paying interest. Funds are assumed to e borrowed, in increments of $1,000, and repaid on the last day of each month: the interest rate is 1.50 percent per month. Chang also pays its vendors on the last day of the month. Required Prepare a cash budget.
Expert Answer
| Dear Student | |||
| Statementshowing Computations | |||
| Paticulars | April | May | June |
| Opening Cash Balance | 18,000.00 | 30,000.00 | 29,145.00 |
| Add Cash Receipts | 200,000.00 | 220,000.00 | 330,000.00 |
| Less Cash payment for inventory purchase | (205,000.00) | (210,000.00) | (232,000.00) |
| Less Cash payment for S& A expenses | (40,000.00) | (53,000.00) | (66,000.00) |
| Ending cash balance before adjustment | (27,000.00) | (13,000.00) | 61,145.00 |
| Funds Borrowed | 57,000.00 | 43,000.00 | – |
| Ending cash balance after adjustment | 30,000.00 | 30,000.00 | 61,145.00 |
| Interest Paid | – | 855.00 | 1,500.00 |
| Ending balance’ | 30,000.00 | 29,145.00 | 59,645.00 |
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