what is the projected amount the city will have to borrow at the end of the quarter 642661

Budgeting Cash Flows. Eagleview City prepares a quarterly forecast of cash flows for its water service department. Data for the upcoming quarter (in alphabetical order) measured on the cash basis are presented below.

Bond interest expense

$ 1,950,000

Current month’s collections on receivables

4,349,350

Interest income on excess cash from previous months

1,849

Investment income

11,250

Materials and supplies disbursements

925,000

Non operating revenue

479,030

Other fees and services disbursements

4,070,000

Previous months’ collections on receivables

4,582,425

Personal services disbursements

1,991,000

Transfers in

50,000

Transfers out

540,000

The city maintains no more than the minimum cash balance of $100,000 on hand.

Required

a. What are the projected cash flows from operating activities, noncapital financing activities, capital and related financing activities, and investing activities?

Indicate whether the balance is a positive cash flow or a negative cash flow.

b. What is the projected amount the city will have to borrow at the end of the quarter to maintain the minimum balance, or what is the amount the city has to invest that exceeds the minimum balance?

c. What steps can the city take to prevent being in a position where it will have to borrow at the end of the quarter?

This problem is adapted from an example in William R. Voorhees and Jeongwoo Kim, “Cash Flow Forecasting: Principles,” Encyclopedia of Public Administration and Public Policy, Taylor & Francis, 2008, pp. 285–290.