Jeff Miller owns Miller Auto Body Repair. During some months, he seems to have sufficient cash to…

Jeff Miller owns Miller Auto Body Repair. During some months, he seems to have sufficient cash to meet all needs and maintain a comfortable cash reserve balance. During other months, he is frustrated because his operating cash supply is severely depleted. As a result, he is establishing a borrowing agreement with a local bank. His objective is to borrow (on the first day of the month) or repay (on the last day of the month) on the loan each month, in $2,500 increments. His planned borrowings/repayments will be based upon a cash budget, and tied to the assumption that the company will end each month with no less than $10,000 of available cash. Evaluate the following facts relating to the period July 1 to September 30, and prepare a monthly cash budget. Whenever repayments are made on the loan, the repayment is to include all accrued interest from the time of the loan origination. Interest accrues at 1% per month. Miller Auto Body had $12,500 of cash on hand on July 1. Sales for May and June were $250,000 and $300,000, respectively. Anticipated sales for July to September are as follows: July ………………………..$ 225,000 August ………………………360,000 September ………………….310,000 Because much of the repair work is done for insurance companies, the pattern of collection for all sales is typically delayed as follows: 20% in the month of sale, 60% in the next following month, and 15% in the second following month. The other 5% is not expected

 

Looking for a Similar Assignment? Let us take care of your classwork while you enjoy your free time! All papers are written from scratch and are 100% Original. Try us today! Use Code FREE15