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4 July, 12:34

Sparks Corporation has a cash balance of $18,000 on April 1. The company must maintain a minimum cash balance of $10,000. During April, expected cash receipts are $98,000. Cash disbursements during the month are expected to total $112,000. Ignoring interest payments, during April the company will need to borrow:a.$2,000b.$4,000c.$8,000d.$6,000

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Answers (1)
  1. 4 July, 12:56
    0
    d.$6,000

    Explanation:

    The computation of the borrowed amount is shown below:

    As we know that

    Ending balance of cash = Beginning balance of cash + Cash receipts - Cash disbursements

    = $18,000 + $98,000 - $112,000

    = $4,000

    Now the borrowed amount is

    = Minimum cash balance - ending balance of cash

    = $10,000 - $4,000

    = $6,000

    Hence, the correct option is d.
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Home » Business » Sparks Corporation has a cash balance of $18,000 on April 1. The company must maintain a minimum cash balance of $10,000. During April, expected cash receipts are $98,000. Cash disbursements during the month are expected to total $112,000.
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