Reference no: EM132656413

For a cash budget for the month July, August, Sep/ following information is given:

1/ Beginning of cash balance in 30/6 is $900

2/ Total cash collections for July, Aug, Sep are $97,040, $100,440, $97,500 respectively.

3/ Cash available for needs for Jul, Aug, Sep are $106,940/$109,440/$106,500 respectively

4/ DM disbursement is $17,057/$14,029/$14,379 respectively

5/ Direct labour disbursment are $41,120/$42,220/$39,460 respectively

6/ Manufacturing OH for are $13060, 13410,12528 respectively

7/ Selling & admin expense are $31,552/$32,318/$31232 Respectively

8/ Non cash item-depreciation on equipment is $1000 for the three months, which is also included in the cash budget

The company has a policy of maintaining a cash balance of $9,000 at the end of each month. This amount represents a buffer that is maintained as a margin of safety against unforeseen events which might cause significant departures from budget estimates. If this requirement cannot be met. The company has a standby credit arrangement in place with its bank to borrow the exact amount needed to achieve the desired cash balance. If the company has a cash balance greater than $9,000 at the end of any month and an outstanding loan balance then the cash in excess of $9,000 is repaid to the bank.

Problem 1: Given that the interest rate applicable to the bank loan is 12% per annum to be paid on a monthly basis on the outstanding principal at the end of the previous month, how the loan repayment, cash excess, and loan balance are calculated in each month in the same cash budget ?