Answer:
B: $7,300
Explanation:
Cash Balance 1 April $ 14,700
Add: Cash Receipts $ 60,000
Less: Cash Payments $(70,000)
Net Cash Balance $ 4,700 A
Amount to Borrow $ 7,300 C
Minimum Cash balance $ 12,000 B
B-A = C.
i.e $12,000 - $ 4,700 = $ 7,300
Answer:
The correct option is B,$7,300
Explanation:
The amount the company needs to borrow can be ascertained from a cash plan drawn up below based on the expected cash inflows and outflows in the month as well as the envisaged closing cash balance.
Opening cash balance $14,700
cash receipts $60,000
total available cash $74,700
expected cash outflows $70,000
Expected closing balance$12,000
Total $82,000
The total cash requirement of $82,000 is more than the available cash of $74,700 by $7,300 ($82,000-$74,700)
The amount of borrowing required is $7,300 as shown in the computation above.
