Western Company is preparing a cash budget for June. The company has $12,000 cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during June. Western Company has an agreement with its bank to maintain a minimum cash balance of $10,000. As of May 31, the company owes $15,000 to the bank. To maintain the $10,000 required balance, during June the company must: Group of answer choices Borrow $4,500. Borrow $2,500. Borrow $10,000. Repay $7,500. Repay $2,500.

Question

Business

Cara Cowan

23 July, 06:45

Western Company is preparing a cash budget for June. The company has $12,000 cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during June. Western Company has an agreement with its bank to maintain a minimum cash balance of $10,000. As of May 31, the company owes $15,000 to the bank. To maintain the $10,000 required balance, during June the company must: Group of answer choices Borrow $4,500. Borrow $2,500. Borrow $10,000. Repay $7,500. Repay $2,500.

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Answers (1)

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Ronin · Answer 1

Borrow $2,500.

Explanation:

This can be calculated as follows:

Details $

Beginning cash balance 12,000

Anticipated cash receipts 30,000

Anticipated cash disbursement (34,500)

Cash balance before financing 7,500

Amount to borrow 2,500

Ending/desired cash balance 10,000