Lindsey Chocolate,Inc The Cash Balance on June 30 Is Projected to Be

Lindsey Chocolate,Inc.has prepared its third quarter budget and provided the following data: $$\begin{array} { | l | r | r | r | } \hline & { \text { Jul } } &{ \text { Aug } } & { \text { Sep } } \\\hline \text { Cash collections } & \$ 51,000 & \$ 39,600 & \$ 46,900 \\\hline \text { Cash payments: } & & & \\\hline \text { Purchases of direct materials } & 31,000 & 21,100 & 17,800 \\\hline \text { Operating expenses } & 12,000 & 8,500 & 11,500 \\\hline \text { Capital expenditures } & 13,400 & 24,500 & 0 \\\hline\end{array}$$ The cash balance on June 30 is projected to be $4,000.The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls.It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%.All financing transactions are assumed to take place at the end of the month.The loan balance should be repaid in increments of $5,000 whenever there is surplus cash.Calculate the ending projected cash balance before financing for August.

A) $9,067
B) $5,000
C) $48,200
D) $(5,933)

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free