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

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

Quizplus · Accepted Answer

The company's ending cash balance is $480,000 + $304,000 - $544,000 = $240,000. Since the company wants to maintain a minimum end of the month cash balance of $400,000, it will need to borrow $400,000 - $240,000 = $160,000.

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