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14 September, 23:31

Sparks Corporation has a cash balance of $10,500 on April 1. The company must maintain a minimum cash balance of $8,500. During April, expected cash receipts are $53,000. Cash disbursements during the month are expected to total $59,500. Ignoring interest payments, during April the company will need to borrow

a. $8.500

b. $4.500

c. $6.500

d. $4.000

+2
Answers (1)
  1. 15 September, 01:36
    0
    b. $4.500

    Explanation:

    The movement in cash balance at the start and end of a period is as a result of cash receipts and disbursements. This may be expressed mathematically as

    Opening cash balance + cash receipts - cash disbursed = closing cash balance

    Hence,

    $10,500 + $53,000 - $59,500 = Closing cash balance

    closing cash balance

    = $4,000

    If the minimum cash balance of $8,500 is expected, then the amount to be borrowed

    = $8500 - $4000

    = $4500
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Home » Business » Sparks Corporation has a cash balance of $10,500 on April 1. The company must maintain a minimum cash balance of $8,500. During April, expected cash receipts are $53,000. Cash disbursements during the month are expected to total $59,500.
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