Answer:
Mike's Motors Corp.
Cash Budget for July, August, and September:
                                           July           August        September       Total
Beginning balance        $32,000     $30,000         $30,000       $32,000
Cash receipts                  83,000      109,000          148,000       340,000
Bank borrowings            26,000           0                   0                  26,000
Total receipts                 141,000       139,000         178,000      $398,000
Cash Payments              111,000        97,900          125,400        334,300.00
Interest                                                    520                 308.40          828.40
Loan repayment                                 10,580            15,420          26,000.00
Total payments              111,000      109,000            141,128.40    361,128.40
Minimum cash balance 30,000       30,000             36,871.60     36,871.60
Explanation:
a) Data and Calculations:
             Cash  Receipts   Cash  Payments
July            $ 83,000        $ 111,000
August        109,000           97,900
September 148,000          125,400
Minimum cash balance = $30,000
Interest on borrowings = 2% per month
July ending:
Borrowing to maintain minimum cash balance = $26,000
Interest for August = $520 ($26,000 * 2%)
August ending:
Loan balance = $15,420 ($26,000 - $10,580)
Interest for September = $308.40 ($15,420 * 2%)