Question

Webster Corporation is preparing its cash budget for April. The March 31 cash balance is $38,600. Cash receipts are expected to be $652,000 and cash payments for purchases are expected to be $614,000. Other cash expenses expected are $28,100 selling and $34,600 general and administrative. The company desires a minimum cash balance at the end of each month of $25,000. If necessary, the company borrows enough cash to meet the minimum using a short-term note. The amount Webster must borrow during April is: Multiple Choice $0. $11,100. $13,900. $101,600. $76,600.

Answer 1

$11,100

Step-by-step explanation:

Calculation for the amount Webster must borrow during April

First step is to find the Preliminary Cash Balance

Preliminary Cash Balance = $38,600 + $652,000 - $614, 000 - $28,100 - $34,600

Preliminary Cash Balance=$13,900.

Second step is to find the amount to be borrowed

The amount to be borrowed = $25,000 - $13,900

The amount to be borrowed= $11,100.

Therefore The amount to be borrowed is $11,100.