Answer:
The answer given is for the data given in the question below.
Step-by-step explanation:
The complete question is :
Lipman Auto Parts, a family-owned auto parts store,began January with $10,300 in cash. Management forecasts that collection from credit customers will be $11,400.00 in January and $14,800 in February. The store is scheduled to receive $5,000.00 in cash on a business note receivable in January. Projected cash payments include inventory purchases($13,000 in January and $13,600 in February) and operating expenses ($2,700 each month). Lipman Auto Parts' bank requires $10,000 minimum balance in the store's checking account. At the end of any month when the account balance dips below $10,000, the bank automatically extends credit to the store in multiples of $1,000. Lipman Auto Parts borrows as little as possible and pays back loans in quarterly installments of $2,000, plus 4 percent interest on the entire unpaid principal. The first payment occurs three months after the loan.
Prepare Lipman Auto Parts' cash budget for January and February
How much cash will Lipman auto Pars borrow in February if collections form customer that month total $13,800 instated of $14,800?
Answer would be like this :
Lipman Auto Parts
Cash Budget
January - February
January February Beginning cash balance $ 10,300 $ 41,000
Cash collections from customers $ 11,400 $ 14,800
Collection of note receivable $ 5,000 $ -
Total cash available $ 56,700 $ 55,800
Cash payments:
Purchases of inventory $ 13,000 $ 13,600
Operating expenses $ 2,700 $ 2,700
Total cash payments $ 15,700 $ 16,300
Ending Cash Balance Before Financing $ 41,000 39,500
Less Required Cash Balance 10,000 10,000
Cash Excess $ 31,000 29500
Financing of Cash Deficiency ------- -------
Ending Cash Balance $ 41,000 39500
Lipman Auto Parts
Cash Budget
January - February
January February Beginning cash balance $ 10,300 $ 41,000
Cash collections from customers $ 11,400 $ 13,800
Collection of note receivable $ 5,000 $ -
Total cash available $ 56,700 $ 54,800
Cash payments:
Purchases of inventory $ 13,000 $ 13,600
Operating expenses $ 2,700 $ 2,700
Total cash payments $ 15,700 $ 16,300
Ending Cash Balance Before Financing $ 41,000 38,500
Less Required Cash Balance 10,000 10,000
Cash Excess $ 31,000 28500
Financing of Cash Deficiency ------- -------
Ending Cash Balance $ 41,000 38500