Question

Sparks Corporation has a cash balance of $9,300 on April 1. The company must maintain a minimum cash balance of $7,500. During April, expected cash receipts are $51,000. Cash disbursements during the month are expected to total $56,500. Ignoring interest payments, during April the company will need to borrow:________

a) $3,800
b) $5,500
c) $3,700
d) $7,500

Answer 1

c) $3,700

Step-by-step explanation:

Excess balance after minimum cash balance = $9,300 - $7,500 = $1,800

Excess cash disbursement=$56,500 - $51,000 = $5,500

In April the company will need to borrow =$5,500- $1,800 = $3,700