Question

Western Company is preparing a cash budget for June. The company has $12,000 cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during June. Western Company has an agreement with its bank to maintain a minimum cash balance of $10,000. As of May 31, the company owes $15,000 to the bank. To maintain the $10,000 required balance, during June the company must:

Answer 1

$2,500

Step-by-step explanation:

Opening balance $12,000

Cash receipts $30,000

Cash disbursement ($34,500)

Closing balance $7,500

Minimum cash balance $10,000

Borrowing amount(1$0,000-$7,500) $2,500

To maintain $10,000 cash balance western company need to borrow $2,500($10,000-$7500)