Find how much cash will davis borrow in february

Reference no: EM13215778

Assume Davis Consulting began January with $29,000 cash. Management forecasts that cash receipts from credit customers will be $49,000 in January and $51,500 in February. Projected cash payments include equipment purchases ($17,000 in January and $40,000 in February) and selling and administrative expenses ($6,000 each month).
Davis's bank requires a $20,000 minimum balance in the firm's checking account. At the end of any month when the account balance falls below $20,000, the bank automatically extends credit to the firm in multiples of $5,000. Davis borrows as little as possible and pays back loans each month in $1,000 increments, plus 5% interest on the entire unpaid principal. The first payment occurs one month after the loan.
Requirements
1. Prepare Davis Consulting's cash budget for January and February 2013.
2. How much cash will Davis borrow in February if cash receipts from customers that month total $21,500 instead of $51,500?

Reference no: EM13215778

Questions Cloud

How much chromium is plated out of the solution : A current of 3.87 A is passed through a Cr(NO3)2 solution for 1.10 hours. How much chromium is plated out of the solution? in (g)

Estimate of the percentage rather than peter''s estimate : However, Peter's assistant Janice believes that the Liberal Party will receive approximately 75% of the vote in that riding. If survey costs are $10 per person, how much money can be saved by using Janice's estimate of the percentage rather than P..

What is the balance in accounts receivable on march 31 : Prepare a revised schedule of cash receipts if receipts from sales on account are 60% in the month of the sale, 30% in the month following the sale, and 10% in the second month following the sale. What is the balance in Accounts Receivable on Marc..

Estimate of the overall percentage of the b.c. : Construct a 89% confidence interval estimate of the overall percentage of the B.C. population in favour of such a casino and what size of sample would be required to do this

Find how much cash will davis borrow in february : Assume Davis Consulting began January with $29,000 cash. Management forecasts that cash receipts from credit customers will be $49,000 in January and $51,500 in February. Projected cash payments include equipment purchases.

What is the probability that a student selected at random : Develop a probability tree showing all marginal, conditional, and joint probabilities and what is the probability that a student selected at random failed the test?

Develop a joint probability : Develop a probability tree showing all marginal, conditional, and joint probabilities and develop a joint probability table.

Explain mortgage interest on residence : During the past year, she paid $2800 in interest on her car loan, $10,000 in mortgage interest on her residence, and $2500 in property taxes on that same home.

Prepare the entry to record original investment in piaffe : On July 1, 2013, Walter Allen Inc. purchased 6,000 shares of the outstanding common stock of Piaffe Corporation at a cost of $140,000. Piaffe had 30,000 shares of outstanding common stock. Assume the total book value and fair value of net assets i..

User Account

All Pages