Answer:
The company needs to borrow $10,000
Explanation:
First, let us state the information given clearly:
Beginning cash balance = $45,000
total cash receipt = $129,000
total cash disbursement = $124,000
desired ending cash balance = $60,000
Next Let us calculate the net cash available after the period's transactions:
Net available cash from transactions = total receipt - total disbursements
= 129,000 - 124,000 = $5,000
Next we were told that the beginning balance = $45,000
This means that without borrowing ;
the net ending cash balance = Net available cash from transactions + beginning cash balance = 5,000 + 45,000 = $50,000
Finally, we are told that the desired ending cash balance = $60,000, and the amount of cash available = $50,000, therefore to meet up the target, the amount that needs to be borrowed is calculated thus:
desired ending cash = available cash + borrowed amount
60,000 = 50,000 + borrowed amount
∴ borrowed amount = 60,000 - 50,000 = $10,000
hence the company needs to borrow $10,000
