Answer:
The answer given is for the data given in the question below.
Explanation:
<em>The complete question is :</em>
<em>Lipman Auto Parts, a family-owned auto parts store,began January with $10,300 in cash. Management forecasts that collection from credit customers will be $11,400.00 in January and $14,800 in February. The store is scheduled to receive $5,000.00 in cash on a business note receivable in January. Projected cash payments include inventory purchases($13,000 in January and $13,600 in February) and operating expenses ($2,700 each month). Lipman Auto Parts' bank requires $10,000 minimum balance in the store's checking account. At the end of any month when the account balance dips below $10,000, the bank automatically extends credit to the store in multiples of $1,000. Lipman Auto Parts borrows as little as possible and pays back loans in quarterly installments of $2,000, plus 4 percent interest on the entire unpaid principal. The first payment occurs three months after the loan.</em>
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<em>Prepare Lipman Auto Parts' cash budget for January and February</em>
<em>How much cash will Lipman auto Pars borrow in February if collections form customer that month total $13,800 instated of $14,800?</em>
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Answer would be like this :
Lipman Auto Parts
Cash Budget
January - February
January February Beginning cash balance $ 10,300 $ 41,000
Cash collections from customers $ 11,400 $ 14,800
Collection of note receivable $ 5,000 $ -
Total cash available $ 56,700 $ 55,800
Cash payments:
Purchases of inventory $ 13,000 $ 13,600
Operating expenses $ 2,700 $ 2,700
Total cash payments $ 15,700 $ 16,300
Ending Cash Balance Before Financing $ 41,000 39,500
Less Required Cash Balance 10,000 10,000
Cash Excess $ 31,000 29500
Financing of Cash Deficiency ------- -------
<u>Ending Cash Balance $ 41,000 39500</u>
Lipman Auto Parts
Cash Budget
January - February
January February Beginning cash balance $ 10,300 $ 41,000
Cash collections from customers $ 11,400 $ 13,800
Collection of note receivable $ 5,000 $ -
Total cash available $ 56,700 $ 54,800
Cash payments:
Purchases of inventory $ 13,000 $ 13,600
Operating expenses $ 2,700 $ 2,700
Total cash payments $ 15,700 $ 16,300
Ending Cash Balance Before Financing $ 41,000 38,500
Less Required Cash Balance 10,000 10,000
Cash Excess $ 31,000 28500
Financing of Cash Deficiency ------- -------
<u>Ending Cash Balance $ 41,000 38500</u>