Question

A company has the following budgeted information: Cash receipts: $542,000; Beginning cash balance: $10,000; Cash payments (including interest payments): $560,000; Outstanding loan balance: $100,000; Desired ending cash balance: $50,000. In order to maintain the desired cash balance, the company will need to: Multiple choice question. borrow $42,000 borrow $58,000 borrow $8,000 borrow $50,000

Answer 1

Answer:

Company A

In order to maintain the desired cash balance, the company will need to:

borrow $58,000

Explanation:

a) Data and Calculations:

Cash receipts: $542,000

Beginning cash balance: $10,000

Cash payments (including interest payments): $560,000

Outstanding loan balance: $100,000

Desired ending cash balance: $50,000

Beginning cash balance: $10,000

Cash receipts:              $542,000

Cash available             $552,000

Cash payments (including

interest payments):   $560,000

Cash balance                 ($8,000)

Desired ending balance 50,000

Amount to borrow =     $58,000