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30 May, 13:28

A company has the following loan activity-Additional loan from bank: $19,000; Ending cash

balance: $5,600. The preliminary cash balance is:

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Answers (1)
  1. 30 May, 15:33
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    Preliminary cash balance = - $13,400.

    Explanation:

    We know,

    Cash at hand = Preliminary cash balance + Additional borrowings from bank.

    Given,

    Cash at hand = $5,600

    Additional borrowings from bank = $19,000

    Putting the values into the formula, we can get

    Cash at hand = Preliminary cash balance + Additional borrowings from bank

    Or, $5,600 = Preliminary cash balance + $19,000

    Or, $5,600 - $19,000 = Preliminary cash balance

    Or, Preliminary cash balance = - $13,400.

    Therefore, the company had no cash at the beginning; rather, they had to use other people's money.
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