Question - Ellen Crawley owns a small restaurant in New York City. Ms. Crawley provided her accountant with the following summary information regarding expectations for the month of June. The balance in accounts receivable as of May 31 is 60,000. Budgeted cash and credit sales for June are 150,000 and 600,000, respectively. Credit sales are made through visa and MasterCard and are collected rapidly. Ninety percent of credit sales are collected in the month of sale, and the remainder is collected in the following month. Ms. crawly suppliers do not extend credit. Consequently, she pays suppliers on the last day of the month. Cash payments for June are expected to be $700,000. Ms. Crowley has a line of credit that enables the restaurant to borrow funds on demand; however, they must be borrowed on the last day of the month. Interest is paid in cash also on the last day of the month. Ms. Crowley desires to maintain a $ 30,000 cash balance before interest payment. Her annual interest rate is 9% disregard any credit card fees.

(A) Compute the amount of funds ms.crawley needs to borrow for June, assuming that the beginning cash balance is zero.

(B) Determine the amount of interest expense the restaurant will report on the June pro forma income statement.

(C) What amount will his restaurants report as interest expense on the July pro forma income statement?