Karim Corp. requires a minimum $8,600 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $9,000 and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow:
| KARIM CORP. |
| Cash Budget |
| For July, August, and September |
| July |
August |
September |
| Beginning cash balance |
| Total cash available |
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|
| Preliminary cash balance |
| Ending cash balance |
| Loan balance |
| Loan balance - Beginning of month |
$0 |
|
| Additional loan (loan repayment) |
|
|
| Loan balance - End of month |
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