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(Solved) How much cash will DeanDeanborrow in February if collections from


How much cash will DeanDeanborrow in February if collections from customers that month total $34,000 instead of $54,000?

If cash collections are $34,000 instead of $54,000in February,the company will borrow $_______ and repay $________


Assume Dean Consulting began January with $8,000 cash. Management forecasts that cash

 

receipts from credit customers will be $51,000 in January and $54,000 in February. Projected

 

cash payments include equipment purchases ($22,000 in January and $38,000 in February) and

 

selling and administrative expenses ($8,000 each month). Dean's bank requires a 32,000

 

minimum balance in the firm's checking account. At the end of any month when the account

 

balance falls below $32,000, the bank automatically extends credit to the firm in multiples of

 

$5,000. Dean borrows as little as possible and pays back loans each month in $1,000

 

increments, plus 12% interest on the entire unpaid principal. The first payment occurs one

 

month after the loan.

 

Requirements

 

1.

 

Prepare Dean Consulting's cash budget for January and February, 2016.

 

2.

 

How much cash will Dean borrow in February if collections from customers that month total

 

34,000 instead of $54,000

 


 

Beginning cash balance

 

Cash receipts

 

Cash available

 

Cash payments:

 

Capital expenditures

 

Selling and administrative expenses

 

Interest expense

 

Total cash payments

 

Ending cash balance before

 

financing

 

Minimum cash balance desired

 

Projected cash excess (deficiency)

 

Financing:

 

Borrowing

 

Principal repayments

 

Total effects of financing

 

Ending cash balance

 


 

For January February and then total.

 


 

 


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Oct 15, 2019

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