Karim Corporation requires a minimum $9,000 cash balance. Loans taken to meet this requirement cost 1% interest per month (paid at the end of each month). Any preliminary cash balance above $9,000 is used to repay loans at month-end. The cash balance on July 1 is $9,400, and the company has no outstanding loans. Budgeted cash receipts (other than for loans received) and budgeted cash payments (other than for loan or interest payments) follow. JulyAugustSeptemberCash receipts$ 25,000$ 33,000$ 41,000Cash payments29,50031,00033,000Prepare a cash budget for July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) KARIM CORP.Cash BudgetJulyAugustSeptemberBeginning cash balance9,400Total cash availableTotal cash paymentsPreliminary cash balanceLoan activityEnding cash balanceLoan balanceLoan balance - Beginning of monthAdditional loan (loan repayment)Loan balance - End of month24%24

In the given question, Karim Corporation's cash receipts and payments are mentioned. We have to…

Answered: Karim Corporation requires a minimum…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 18E

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Karim Corporation requires a minimum $9,000 cash balance. Loans taken to meet this requirement cost 1% interest per month (paid at the end of each month). Any preliminary cash balance above $9,000 is used to repay loans at month-end. The cash balance on July 1 is $9,400, and the company has no outstanding loans. Budgeted cash receipts (other than for loans received) and budgeted cash payments (other than for loan or interest payments) follow.

	July	August	September
Cash receipts	$ 25,000	$ 33,000	$ 41,000
Cash payments	29,500	31,000	33,000

Prepare a cash budget for July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.)

KARIM CORP.
Cash Budget
July
August
September
Beginning cash balance
9,400
Total cash available
Total cash payments
Preliminary cash balance
Loan activity
Ending cash balance
Loan balance
Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance - End of month
24
%24

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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