Question

During December, the capital budget indicates a $280200 purchase of equipment for cash. The ending November...

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?

$11100

$50700

$31400

$0
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Homework Answers

Answer #1

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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