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12 November, 10:39

Sparks Corporation has a cash balance of $19,500 on April 1. The company must maintain a minimum cash balance of $16,000. During April, expected cash receipts are $68,000. Cash disbursements during the month are expected to total $82,000. Ignoring interest payments, during April the company will need to borrow:

a. $10,500

b. $5,500

c. $16,000

d. $14,000

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Answers (1)
  1. 12 November, 13:08
    0
    Cash borrow = 10500

    so correct option is a. $10,500

    Explanation:

    given data

    Ending cash balance = $16,000

    Beginning cash balance = $19,500

    expected cash receipts = $68,000

    Cash disbursements = $82,000

    solution

    we know that Ending cash balance is express as

    Ending cash balance = Beginning cash balance + Cash receipts - Cash disbursements + Cash borrow ... 1

    we get here Cash borrow put here value

    $16,000 = $19,500 + $68,000 - $82,000 + Cash borrow

    solve it we get

    Cash borrow = 10500

    so correct option is a. $10,500
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