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10 November, 07:12

Forâ April, Anderson Antiques will have cash receipts ofâ $365,000 and cash disbursements ofâ $370,000. If its beginning cash isâ $4,000 and its desired reserve isâ $3,000, what will be its shortfall in cash for theâ month?

A. There is no shortfall in cash but an excess of cash.

B. ââ$3,000

C. ââ$5,000

D. ââ$4,000

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Answers (1)
  1. 10 November, 07:33
    0
    D. $4,000

    Explanation:

    For Anderson Antiques the following have been given

    Opening balance = $4,000

    Cash receipts (inflow) = $365,000

    Cash disbursed (outflow) = $370,000

    Desired reserve = $3,000

    So cash at end of day = Opening balance + cash inflow - cash outflow

    = 4,000 + 365,000 - 370,000

    = - 1,000

    Remember we want a cash reserve of $3,000 so we take it out of closing balance

    Final figure = - 1,000-3000 = - $4,000

    So shortfall of $4,000
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