Slim Corp Requires a Minimum $8,000 Cash Balance

question 105

Essay

Slim Corp. requires a minimum $8,000 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). Loans are repaid at month's end from any excess cash. The cash balance on July 1 is $8,400. 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:

Incidental Damages

Damages that compensate for expenses directly incurred because of a breach of contract, such as those incurred to obtain performance from another source.

Rescind The Contract

The legal action of canceling or nullifying a contract, effectively terminating the agreement and releasing the parties from their obligations.

Failure To Perform

The inability or refusal to fulfill a contractual obligation or duty.

Construction Contract

A legally binding agreement between a contractor and client specifying the details of a construction project, including scope of work, timelines, and payment.