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Accounting

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Item 14
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The Arkansas Company makes and sells a product called Product K.Each unit of Product K sells for $42 and has a unit variable costof $20. The company has the following budgeted data forNovember:
Sales of $1,332,200, all in cash.
A cash balance on November 1 of $67,800.
Cash disbursements (other than interest) during November of$1,340,000.
A minimum cash balance on November 30 of $98,000.
If necessary, the company will borrow cash from a bank. Theborrowing will be in multiples of $1,000 and will bear interest at2% per month. All borrowing will take place at the beginning of themonth. The November interest will be paid in cash duringNovember.
The amount of cash needed to be borrowed on November 1 to cover allcash disbursements and to obtain the desired November 30 cashbalance is: (Round up your answer to nearest multiple of$1,000.)

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3.8 Ratings (392 Votes)

Cash Balance on 1st November	67,800
Sales	1,332,200
Cash Disbursement	-1,340,000
Closing Cash	60,000
Required Closing Cash	98,000
Bank Loan (Before Interest)	38,000	(98,000-60,000)
Bank Loan (After Interest)	38,776	(38,000 / 98%)
Bank Loan (After Interest) round off	39,000

Cash Balance on 1st November	67,800
Sales	1,332,200
Cash Disbursement	-1,340,000
Bank Loan	39,000
Interest Payment	-780	(38,776 x 2%)
Cash Balance on 30th November	98,220
Cash Balance on 30th November (round off)	98,000

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In: AccountingTime Remaining 1 hour 5 minutes 30 seconds01:05:30Item 14Item 14Time Remaining 1...Time Remaining 1 hour 5 minutes 30 seconds01:05:30Item 14Item 14Time Remaining 1 hour 5 minutes 30 seconds01:05:30The Arkansas Company makes and sells a product called Product K.Each unit of Product K sells for $42 and has a unit variable costof $20. The company has the following budgeted data forNovember:Sales of $1,332,200, all in cash.A cash balance on November 1 of $67,800.Cash disbursements (other than interest) during November of$1,340,000.A minimum cash balance on November 30 of $98,000.If necessary, the company will borrow cash from a bank. Theborrowing will be in multiples of $1,000 and will bear interest at2% per month. All borrowing will take place at the beginning of themonth. The November interest will be paid in cash duringNovember.The amount of cash needed to be borrowed on November 1 to cover allcash disbursements and to obtain the desired November 30 cashbalance is: (Round up your answer to nearest multiple of$1,000.)