Determine loan outstanding at the end of each month

Reference no: EM132478479

Point 1: Udonis, Inc. has produced the following forecast for cash flow from operations for July through September, 2009. At the end of June, Udonis expects to having a closing cash balance of $5,500 and a loan covenant requires the company to maintain a minimum balance of $5,000.

Point 2: The company has a line of credit available at an annual interest rate of 12%. It must pay interest on any loan each month based on the outstanding balance at the end of the previous month and, to minimize interest expense, it repays loans as soon as funds are available.

Problem 1: Ignoring taxes, show the company's cash balance and loan outstanding at the end of each month.

Jul Aug Sep Oct Nov Dec

Operating Cash Flow ($3,000) $400 ($1,000) $5,000 ($2,200) $7,000

Reference no: EM132478479

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