Question

In: Accounting

Sparks Corporation has a cash balance of $12,900 on April 1. The company must maintain a...

Sparks Corporation has a cash balance of $12,900 on April 1. The company must maintain a minimum cash balance of $10,500. During April, expected cash receipts are $57,000. Cash disbursements during the month are expected to total $65,500. Ignoring interest payments, during April the company will need to borrow:

$4,400

$6,100

$8,500

$10,500

Sparks Corporation has a cash balance of $12,900 on April 1. The company must maintain a minimum cash balance of $10,500. During April, expected cash receipts are $57,000. Cash disbursements during the month are expected to total $65,500. Ignoring interest payments, during April the company will need to borrow: $4,400 $6,100 $8,500 $10,500

Solutions

Expert Solution

  • All working forms part of the answer
  • NOTE: Same question got posted twice.
  • Working

A

Beginning Cash Balance - Apr 1

$           12,900.00

B

Cash receipts

$           57,000.00

C = A + B

Total Cash Available

$           69,900.00

D

Cash Disbursements

$           65,500.00

E = C - D

Excess of Cash available over disbursements

$             4,400.00

F

Ending balance desired

$           10,500.00

G = F - E

Amount to be borrowed

$             6,100.00 = Answer

  • Correct Answer = Option #2: $ 6,100

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