The monthly cash budgets for the first quarter of 2009 are shown below ($000 omitted) for XYZ Company. A minimum cash balance of $40,000 is required. A line of credit has been established with ABC's bank at a 7.5% interest rate. Calculate the missing amounts:

http://ezto.mhhm.mcgraw-hill.com/132...a=image025.png

The link above provides the chart with the blanks that I am suppose to fill in.
Here is what I have so far:

January blanks:
136
100
228

February blanks:
-40
174
78

March
272
48
4

Q1 Total
622
316
186

I am not sure that I truly understand the borrowings and repayments that they are looking for on the chart. I hope you are able to see it! Please help.

Quote:

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Originally Posted by needygirl

The monthly cash budgets for the first quarter of 2009 are shown below ($000 omitted) for XYZ Company. A minimum cash balance of $40,000 is required. A line of credit has been established with ABC's bank at a 7.5% interest rate. Calculate the missing amounts:

http://ezto.mhhm.mcgraw-hill.com/132...a=image025.png

The link above provides the chart with the blanks that I am suppose to fill in.
Here is what I have so far:

January blanks:
136
100
228

February blanks:
-40
174
78

March
272
48
4

Q1 Total
622
316
186

I am not sure that I truly understand the borrowings and repayments that they are looking for on the chart. I hope you are able to see it! Please help.

---

In the first month the borrowings would be 80 restoring the balance to 40 which becomes to opening balance for the following month, etc

Quote:

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Originally Posted by paraclete

in the first month the borrowings would be 80 restoring the balance to 40 which becomes to opening balance for the following month, etc

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BUT there is 7.5% interest. That interest is then paid and you have to have a minimum of 40,000 in the account..?

Quote:

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Originally Posted by needygirl

BUT there is 7.5% interest. That interest is then paid and you have to have a minimum of 40,000 in the account. . . ?!

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In my experience interest is determined and paid in arrears so if you borrow 80 and repay it in a subsequent month you repay 81. If you want to be more precise you will have to expand to whole numbers instead of thousands. I have said this to others, there is such a thing as overthinking a problem assume the simplist explanation unless you are told otherwise
Perhaps these numbers will mean something to you without captions they are meaningless but you already have a table into which they fit, press the reply button to restore the format
52 40 40 52
136 214 272 622
188 254 312 674
100 120 86 306
60 88 48 196
68 16 4 88
18 18
228 214 166 608
-40 40 146 66
80 -81 -1
40 40 65 65
It is a shame this site doesn't allow you to maintain formatting of a table