Question - Academy Retail is preparing its Cash budget and has predicted the following cash flows for the upcoming two months:
|
MONTH
|
Budget Cash Receipt
|
Budgeted Cash Disbursement
|
|
April
|
$400,000
|
$450,000
|
|
May
|
$500,000
|
$450,000
|
The Cash balance at the beginning of April is $30,000. Academy requires a minimum ending Cash balance of $10,000 and can borrow any amount at the beginning of any month. The company can repay any loan amount with the rest interest due at the end of any month. Interest is 1% per month simple interest (not compounded per month). The company does not invest excess cash.
What amount would the company need to borrow in April?
What would be the ending Cash balance for May after any repayment of loan and interest?