I do not understand why part b is not 235 Transcribed Image Text: James Smith has been working on Crane Paints’ cash budget for the

I do not understand why part b is not 235 Transcribed Image Text: James Smith has been working on Crane Paints’ cash budget for the coming year. Based on his
projections for March, the beginning cash balance will be $40,70O; cash collections will be
$500,000; and cash disbursements will be $534,000. Crane Paints desires to maintain a $30,000
minimum cash balance. The company has a 12% open line of credit with its bank, which provides
short-term borrowings in $500 increments. All borrowings are made at the beginning of the month,
and all repayments are made at the end of the month (in $500 increments). Accrued interest is paid
at the time of repayment.
(a) How much will Crane Paints need to borrow from the bank at the beginning of March?
Crane Paints should borrow
$
23500
(b) Assuming that Crane Paints has $20,000 in excess cash budgeted for April, how much
principalwill the company plan to repay? How much interest will be repaid in April?
Principal to be repaid
19500
Interest to be repaid
$4
235
%24

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