ABC Company has a cash balance of $9,000 on April 1. The company must maintain a minimum cash balance of $6,000. During April expected cash receipts are $45,000. Expected cash disbursements during the month total $52,000. During April the company will need to borrow:

Question

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The company starts with a cash balance of $9,000 but must maintain a minimum balance of $6,000, leaving them with a surplus of $3,000. However, the expected cash disbursements of $52,000 exceed the expected cash receipts of $45,000, resulting in a shortfall of $7,000. To maintain the minimum balance of $6,000, they will need to borrow an additional $4,000 ($7,000 - $3,000 surplus = $4,000). Therefore, the answer is A) $4,000.

ABC Company Has a Cash Balance of $9,000 on April