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17 February, 15:49

Great Skot expects to have cash receipts in June of $532,160. Skot's cash disbursements in June are $581,720, including an interest payment on a bond issue of $32,000. If Skot wishes to maintain a cash balance of $40,000, how much will Skot have to borrow if it started the month with a cash balance of $52,000?

a.$37,560

b. Surplus of $2,440. Will not have to borrow

c.$5,560

d. Surplus of $34,440. Will not have to borrow

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  1. 17 February, 18:59
    0
    a.$37,560

    Explanation:

    Cash balance $40,000 at month end = Cash balance $52,000 at beginning + cash receipts in June of $532,160 - cash disbursements of $581,720 + New borrowing

    ⇔ $40,000 = $2,440 + new borrowing

    ⇔ New borrowing = $40,000 - $2,440 = $37,560

    If Skot wishes to maintain a cash balance of $40,000, Skot have to borrow $37,560 if it started the month with a cash balance of $52,000
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