Great Skot expects to have cash receipts in June of $532,160. Skot's cash disbursements in June are $581,720, including an interest payment on a bond issue of $32,000. If Skot wishes to maintain a cash balance of $40,000, how much will Skot have to borrow if it started the month with a cash balance of $52,000?

a.$37,560

b. Surplus of $2,440. Will not have to borrow

c.$5,560

d. Surplus of $34,440. Will not have to borrow

Question

Nayeli Bonilla

Business

10 May, 22:17

Great Skot expects to have cash receipts in June of $532,160. Skot's cash disbursements in June are $581,720, including an interest payment on a bond issue of $32,000. If Skot wishes to maintain a cash balance of $40,000, how much will Skot have to borrow if it started the month with a cash balance of $52,000?

a.$37,560

b. Surplus of $2,440. Will not have to borrow

c.$5,560

d. Surplus of $34,440. Will not have to borrow

+2

Answers (1)

Know the Answer?

Bridget · Answer 1

a.$37,560

Explanation:

Cash balance $40,000 at month end = Cash balance $52,000 at beginning + cash receipts in June of $532,160 - cash disbursements of $581,720 + New borrowing

⇔ $40,000 = $2,440 + new borrowing

⇔ New borrowing = $40,000 - $2,440 = $37,560

If Skot wishes to maintain a cash balance of $40,000, Skot have to borrow $37,560 if it started the month with a cash balance of $52,000