Question

Batista Company management wants to maintain a minimum monthly cash balance of $19,900. At the beginning of April, the cash balance is $21,100, expected cash receipts for April are $245,600, and cash disbursements are expected to be $256,200. How much cash, if any, must be borrowed to maintain the desired minimum monthly balance? Amount to be borrowed to maintain the desired minimum monthly balance

Answer 1

Amount to be borrowed = $9,400

Step-by-step explanation:

Provided, opening cash balance = $21,100

Add: Expected cash receipts = $245,600

Less: Expected cash disbursements = $256,200

Closing balance expected = $10,500

Since net balance to be maintained in cash = $19,900

Cash to be borrowed to maintain this balance = $19,900 - $10,500 = $9,400

this amount has to be borrowed and can be borrowed at any time during the month.

Final Answer

Amount to be borrowed = $9,400