Southland Company is preparing a cash budget for August. The company has $17,000 cash at the beginning of August and anticipates

Question

3 years ago

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Southland Company is preparing a cash budget for August. The company has $17,000 cash at the beginning of August and anticipates

$120,800 in cash receipts and $134,500 in cash disbursements during August. Southland Company wants to maintain a minimum cash balance of $10,000. To maintain the minimum cash balance of $10,000, the company must borrow:
A. $0.
B. $10,000.
C. $6,700.
D. $7,000.
E. $27,700.

Business

1 answer:

miv72 [106K] · Answer 1 · 2022-02-04T01:57:37+03:00

Answer:

Correct option is C $6700

Explanation:

It is calculated that the net cash balance is $3,300. But, the minimum cash balance should be $10,000. The difference amount should be borrowed. Thus, $3,300 is deducted from $10,000. The amount to be borrowed by the company is $6,700.