Question

A company has the following loan activity—Additional loan from bank: $19,000; Ending cash

balance: $5,600. The preliminary cash balance is:​

Answer 1

Preliminary cash balance = - $13,400.

Step-by-step explanation:

We know,

Cash at hand = Preliminary cash balance + Additional borrowings from bank.

Given,

Cash at hand = $5,600

Additional borrowings from bank = $19,000

Putting the values into the formula, we can get

Cash at hand = Preliminary cash balance + Additional borrowings from bank

Or, $5,600 = Preliminary cash balance + $19,000

Or, $5,600 - $19,000 = Preliminary cash balance

Or, Preliminary cash balance = - $13,400.

Therefore, the company had no cash at the beginning; rather, they had to use other people's money.