Tomo, Inc. has prepared its third quarter budget and provided the following dа ta:: Jul Aug SepCash collections $50,000 $39,600 $46,100Cash payments: Purchases of direct materials 30,000 21,700 17,600Operating expenses 12,300 8,000 11,600Capital expenditures 13,700 24,300 0The cash balance on June 30 is projected to be $4500. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 whenever there is surplus cash. How much will the company have to borrow at the end of July?

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Business

Sarah Bowers

4 July, 16:13

Tomo, Inc. has prepared its third quarter budget and provided the following dа ta:: Jul Aug SepCash collections $50,000 $39,600 $46,100Cash payments: Purchases of direct materials 30,000 21,700 17,600Operating expenses 12,300 8,000 11,600Capital expenditures 13,700 24,300 0The cash balance on June 30 is projected to be $4500. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 whenever there is surplus cash. How much will the company have to borrow at the end of July?

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Julius Quinn · Answer 1

The firm will needto borrow 6,500 to achieve their minimum cahs balance and pay their budgeted expenditures

Explanation:

July

beginning $ 4,500

receipts $ 50,000

disbursement + $ (56,000) *

subtotal $ (1,500)

minimun $5,000

Financing needs: 5000 - (-1500) = 6,500

payment/loan $6,500

*sum of cash payment for purchase of materials, operating expenses and capital expenditures