Answer:
The correct answer is:
Repay $413 (d)
Explanation:
In order to solve this, we first of all have to classify all the cash as either income or expenditure, then we find the net balance, and putting the minimum cash balance into consideration, find if money will be borrowed or payed. It is calculated as follows:
Beginning balance = $1,211
Outstanding debt = $1,318
Quarterly Receipt = $4,209
Quarterly disbursement = $3,807
Minimum holding balance = $1,200.
Next, let us determine all the incomes and money at hand, they are; Beginning balance and quarterly receipt, while the expenditure is; quarterly disbursement.
Next, we will calculate the balance after available cash has been subtracted from expenditure.
Total cash available = Beginning balance + quarterly receipt
= $1,211 + $4,209 = $5,420.
Balance left at the end of the quarter = Available cash - expenditure
= $5,420 - $3,807 = $1,613
So at the end of the quarter, we are left with a balance of $1,613.
Next, we have to consider the statement that says "the minimum cash required by the company is $1,200" meaning that at any time, the cash of the company is at least $1,200.
Hence, amount left when minimum cash is removed = $1,613 - $1,200 = $413.
The excess balance left at the end of the quarter is $413, and since the company was owing some debt, it will have to repay with the excess fund of $413.
