Poor Richard's Pizza provides you with the following information for January and February:
– Cash collections on sales are $500,000 in January and $1,100,000 in February.
– Cash outlays for Operating Costs and Inventory are expected to be $900,000 for
January and $800,000 for February. All amounts are paid in the month incurred.
– The company expects to pay cash dividends o shareholders in February in the amount
– The Company's January 1 cash balance is $100,000.
– The company has no loans outstanding at December 31.
– The company has $200,000 in outstanding receivables January 1. All amounts will
be collected in January.
– The company would like to have a minimum cash balance of $100,000 at the end of
each month. If their end of month balance drops below $100,000, they can borrow
money from the bank at a rate of 12% per annum (1% per month. Loan assumed
to be borrowed at the beginning of the month. Interest paid at the end of the month
the loan is repaid.
After preparing a Cash Receipts and Disbursements budget, what is the maximum LOAN REPAYMENT (PRINCIPAL + INTEREST) that Poor Richards can make in February.
a. February Loan Repayment:
b. February Loan Repayment:
c. February Loan Repayment:
d. Poor Richard's is unable to make any loan repayments in February
e. None of the other answers are correct