Question

Waggoner Company has a cash balance of $44,000 on April 1. The company is required to maintain a cash balance of $25,000. During April expected cash receipts are $174,000. Expected cash disbursements during the month total $200,800. During April the company will need to borrow:____.

a. $2,500.b. $3,500.c. $4,000.d. $6,000.

Answer 1

Answer: $7,800

Step-by-step explanation:

The amount that the company needs to borrow can be found using the formula:

= Opening balance + Cash receipts - Cash to be maintained - Cash disbursement

= 44,000 + 174,000 - 25,000 - 200,800

= -$7,800

Amount to be borrowed is the shortfall of $7,800