## (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

fiÂnancing

Minimum cash balance desired

Projected cash excess (deficiency)

Financing:

Borrowing

Principal repayments

Total effects of Âfinancing

Ending cash balance

For January February and then total.

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This question was answered on: Oct 15, 2019

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