Widmer Corp

question 76

Essay

Widmer Corp. requires a minimum $10,000 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). If the ending cash balance exceeds the minimum, the excess will be applied to repaying any outstanding loan balance. The cash balance on July 1 is $10,400. Cash receipts other than for loans received for July, August, and September are forecasted as $24,000, $32,000, and $40,000, respectively. Payments other than for loan or interest payments for the same period are planned at $28,000, $30,000, and $32,000, respectively at July 1, there are no outstanding loans.
Required:
Prepare a cash budget for July, August, and September.

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Definitions:

Capital

Financial assets or resources that individuals or businesses use to fund their operations and invest in growth opportunities.

Pre-money Valuation

The valuation of a company immediately before the latest round of financing or investment, used to determine the price at which new shares are issued.

Outside Investment

Financial capital provided by investors who are not part of the day-to-day operations of a business, usually in exchange for equity.

Company's Value

An assessment of a business's total worth, based on factors such as assets, earnings, and market position.