 Hello in this presentation we're going to work some test type problems smaller type problems that could be in a multiple-toys type format so we're going to start off here with this problem. Note that a longer type of problem like this might be useful to actually read the last sentence first might save some time so we know what it's going to ask for at the end and then when we read through it it's good to just plot down those numbers that we can then use at a later point. So we're going to say that to maintain a 10,000 I'm reading this last sentence. To maintain the 10,000 required balance during June the company must do what? So we can see we're talking about a bank account I see a bank account here we want to retain a $10,000 balance so it sounds like we need to basically measure the activity in the bank account so as we read through it I'm going to list out kind of a data and punch that into Excel so we may be able to record that information. So company so I'm going to read it from the top now. Company is prepared a cash budget for June cash budget for June the company has 11300 cash at the beginning so I'm just going to say our beginning cash and I'm just going to say beginning balance we're talking about the cash account so we'll just say the beginning started off with 11,300 11,300 and anticipates 30,007 in cash receipts so I'm just going to say all right receipts we think we're going to pull in another 30,700 cash receipts and 35,900 in disbursements so we're going to have to pay out this is a budget of course disbursements and receipts we're estimating I'm just going to abbreviate we're going to say 35 I'll make it I'll make it a negative negative 35,900 and you'll note that I underline that with the underline here already that sales been underlined okay and see what else we have the company has has an agreement with the bank to maintain a minimum balance I'm just going to note that over here minimum balance we want a minimum balance in our checking account of 10,000 that's like our cushion we don't want to go below that we're told our bank hey if we go below 10 then give us an automatic loan because we need 10 in there at any given time in case of emergency we currently have a loan to the bank of May 31st 15,000 all right so I'm just going to note that on the side so now we need to read that last sentence again to maintain the 10,000 required balance during June the company must do what well let's see where we are at the ending balance as of now we said that we I'm just going to sum these up we had a beginning balance of 11 3 plus receipts of 37 that's what we think's going to happen at least in disbursements of 35 9 so we sum that up equals the sum of I'm going to say this plus this minus this that's the sum of these last one being a negative number we say enter we get these 6001 of course all we did was in a calculator say 11 3 plus 3007 minus the 35 9 gives us the 6 1 now we see that that is below 10,000 right that's below 10,000 that's our minimum balance so we need a minimum of 10,000 so what's the bank going to do it's going to increase our loan then so I'm going to underline this and I'm going to say we need then a loan equaling 10,000 minus what's currently in there the 6 1 that means we need another three nights what's going to happen what's going to be you know in the answers when we look at a multiple choice question we're going to have to get a loan we got to increase the loan for this 39 what's that going to do to our total loan because the current loan balance happens to be this 15 so that will increase our balance to it's going to increase it by the 39 and we currently have a balance of 15 so the answer key could say we need to increase the loan by 39 the answer key another type of variation of this problem might say that well what's going to be the loan balance after this month is over and that would be 18 9 all right we have the next one here once again I'm going to try to read that last line and see if I can get some information before reading the entire thing so the last line here says start in here compute the projected sales expense to be reported on the selling expense budget for the manager for the month ended June 30th so we're going to keep that in mind as we read through it I'm going to start from the top now company sells a product for $700 so unit price is going to be 700 I'll just log that in units sales for May so we're going to say May I'm going to put a header here May and we'll say unit sales unit sales for May are going to be 400 and we just know we already know that we have this unit price so I'm going to put that down here and I'm going to say okay well the unit price is going to be down here and you could retype this in I know I'm formatting and formatting is half the half the issue whether you do it by hand or in Excel so we're going to put it and try to put it in this kind of grid type format so we're going to say all right well unit sales are here unit price is here so that's what we have for May so far 400 and sales are expected to increase