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Nataliya [291]
3 years ago
6

The George Company has a policy of maintaining an end-of-month cash balance of at least $37,000. In months where a shortfall is

expected, the company can draw in $1,000 increments on a line of credit it has with a local bank, at an interest rate of 12% per annum. All borrowings are assumed for budgeting purposes to occur at the beginning of the month, while all loan repayments (in $1,000 increments of principal) are assumed to occur at the end of the month. Interest is paid at the end of each month. For April, an end-of-month cash balance (prior to any financing and interest expense) of $24,000 is budgeted; for May, an excess of cash collected over cash payments (prior to any interest payments and loan repayments) of $28,000 is anticipated.
1.What is the interest payment estimated for April (there is no bank loan outstanding at the end of March)? (Do not round intermediate calculations.)
2.What is the total financing effect (cash interest plus loan transaction) for May? (Do not round intermediate calculations.)
Business
1 answer:
amid [387]3 years ago
6 0

Answer:

  1. $140
  2. $14,140

Explanation:

1. First find the net amount amount the company borrowed in April:

= Cash balance to be maintained + Loan repayment - Budgeted end of April balance

= 37,000 + 1,000 - 24,000

= $14,000

Interest = 14,000 * 12%/ 12 months

= $140

2. Financing effect:

= Amount borrowed + Interest

= 14,000 + 140

= $14,140

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Answer:

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The total dividends paid for 2017 is:

= $556.

Explanation:

a) Data and Calculations:

Windswept, Inc.

Income Statement for the year ended December 31, 2017:

Net Sales                                           $9,740

Cost of goods sold                              7,910

Depreciation                                          480

Earnings before interest and taxes $1,350

Interest paid                                            110

Taxable income                                $1,240

Taxes                                                     434

Net income                                         $806

Windswept, Inc.

2016 and 2017  Balance Sheets ($ in millions)

                               2016        2017                                     2016       2017

Cash                      $260       $290  Accounts payable    $1,490   $1,460

Accounts rec.        1,060         960  Long-term debt           1,130     1,330

Inventory               1,900       1,740  Common stock          3,400    3,340

Total                   $3,220   $2,990  Retained earnings        670       920

Net fixed assets   3,470     4,060

Total assets      $6,690    $7,050  Total liab. & equity  $6,690  $7,050

The total dividends paid for 2017:

Retained earnings, Dec. 31, 2016        $670

Net income for the year, 2017               806

Less Retained earnings, Dec. 31, 2017 920

Dividends paid                                     $556

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3 0
3 years ago
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