During December, the capital budget indicates a $280200 purchase of equipment for cash. The ending November cash balance is budgeted to be $39600. Cash receipts are $839900, and cash disbursements are $610400 during December. The company wants to maintain a minimum cash balance of $20300. What is the minimum cash loan that must be planned to be borrowed from the Bank during December?
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Answer- The minimum cash loan that must be planned to be borrowed from the Bank during December is = $31400.
Explanation-
Cash Budget | |
Particulars | December |
$ | |
Beginning cash balance (A) | 39600 |
Add- Budgeted cash receipts | |
Cash receipts | 839900 |
Total cash available for use (B) | 879500 |
Less- Cash Payments | |
Cash disbursements | 610400 |
Purchase of equipment | 280200 |
Total cash payments (C) | 890600 |
Cash surplus/ (Deficit) (D=A+B-C) | -11100 |
Financing:- | |
Add-Borrowings | 31400 |
Less-Repayments | 0 |
Budgeted ending minimum cash balance | 20300 |
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