Karim 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). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $8,400 and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) are:
| |
July |
August |
September |
| Cash receipts |
$ |
20,000 |
$ |
26,000 |
$ |
40,000 |
| Cash disbursements |
|
28,000 |
|
30,000 |
|
22,000 |
Prepare a cash budget for July, August, and September.