The following information was taken from Southgate Industry's cash budget for the month of July: $$\begin{array} { l r }
\text { Beginning cash balance } & \$ 480,000 \
\text { Cash receipts } & 304,000 \
\text { Cash disbursements } & 544,000
\end{array}$$ If the company has a policy of maintaining a minimum end of the month cash balance of $400,000, the amount the company would have to borrow is
A)$160,000.
B)$80,000.
C)$240,000.
D)$96,000.

Question

The following information was taken from Southgate Industry's cash budget for the month of July: $$\begin{array} { l r } 
\text { Beginning cash balance } & \$ 480,000 \
\text { Cash receipts } & 304,000 \
\text { Cash disbursements } & 544,000
\end{array}$$ If the company has a policy of maintaining a minimum end of the month cash balance of $400,000, the amount the company would have to borrow is
A)$160,000.
B)$80,000.
C)$240,000.
D)$96,000.

Quizplus · Accepted Answer

The company needs to maintain a minimum end of the month cash balance of $400,000. The beginning cash balance is $480,000, and the cash receipts are $304,000. The total cash available is $784,000. The cash disbursements are $544,000. The ending cash balance is $240,000. The company needs to borrow $160,000 to maintain the minimum end of the month cash balance.

The Following Information Was Taken from Southgate Industry's Cash Budget