Question

During December, the capital budget indicates a $279100 purchase of equipment for cash. The ending November...

During December, the capital budget indicates a $279100 purchase of equipment for cash. The ending November cash balance is budgeted to be $40800. Cash receipts are $840700, and cash disbursements are $610400 during December. The company wants to maintain a minimum cash balance of $20100. What is the minimum cash loan that must be planned to be borrowed from the Bank during December? $28100 $8000 $48800 $0

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Answer #1

Answer:$28,100

Working:

Budgeted cash balance at the end of November

$            40,800

Add: Net cash available in December (Receipts - Disbursements)

$          230,300

Less: Minimum cash balance

$          (20,100)

Budgeted cash remained after fulfilling minimum cash requirement

$          251,000

Less: Cash required for purchase of equipment

$        (279,100)

Minimum cash loan to be borrowed

$            28,100
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