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problem: The following budget estimates have been prepared by Flowers Company:

 

Cash Receipts

Cash Payments

January

$220,000

$220,000

February

380,000

400,000

March

320,000

319,800

The company likes to keep a minimum cash balance of dollar 50,000.

Any excess cash is invested in a money market account earning 8% compounded monthly. Interest is reinvested in the money market account. Any cash deficiencies are covered by a withdrawal from the money market account. If additional cash is needed, the company has a line of credit at 12% interest with the local bank.

Assume a cash balance on January 1 of dollar 50,000, a money market account balance of dollar 0, & a credit line loan balance of dollar 0.

Required:

Make a cash budget for each of the first 3 months of the year.

 

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M917968

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