The ABC Company has made the following monthly estimates of cash receipts and cash disbursements when...

The ABC Company has made the following monthly estimates of cash receipts and cash disbursements when preparing cash budgets for the next twelve months. ABC has beginning cash on hand of $25,000 and wants to maintain this minimum cash level throughout the next year. Cash Cash Month Receipts Disbursements January $100,000 $110,000 February $90,000 $110,000 March $95,000 $115,000 April $100,000 $150,000 May $130,000 $180,000 June $160,000 $180,000 July $200,000 $190,000 August $245,000 $180,000 September $245,000 $150,000 October $180,000 $120,000 November $140,000 $110,000 December $100,000 $100,000 A. Will ABC have to borrow cash during the next year? B. If the company does need cash, in which month will it first need the cash? C. What is the most cash the company will need to borrow during the year (maximum amount borrowed in one month)? D. Will the company have paid back all of its borrowings by the end of the year?

Expert Solution

Month		Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
Beginning cash balance		25000	25000	25000	25000	25000	25000	25000	25000	25000	25000	25000	25000
cash receipts		100000	90000	95000	100000	130000	160000	200000	245000	245000	180000	140000	100000
total cash available		125000	115000	120000	125000	155000	185000	225000	270000	270000	205000	165000	125000
cash disbursement		110000	110000	115000	150000	180000	180000	190000	180000	150000	120000	110000	100000
cash available		15000	5000	5000	-25000	-25000	5000	35000	90000	120000	85000	55000	25000
Minimum cash balance		25000	25000	25000	25000	25000	25000	25000	25000	25000	25000	25000	25000
amount borrowed or paid		-10000	-20000	-20000	-50000	-50000	-20000	10000	65000	95000	60000	30000	0
balance in Borrowed amount or avaialbility of cash		-10000	-30000	-50000	-100000	-150000	-170000	-160000	-95000	0	60000	90000	90000

A-	no fund would be borrowed next year as sufficient cash are available	90000
B-	In the month of january
C-	In the month of April and May
d-	Yes as sufficient cash are avaialble to pay all the debts

jeff jeffy answered 1 year ago

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