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9 September, 18:12

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

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  1. 9 September, 18:22
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    Amount to be borrowed = $9,400

    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
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