In the month of August, a firm had total cash receipts of $10,000, total cash disbursements of $8,000,depreciation expense of $1,000, a minimum cash balance of $3,000, and a beginning cash balance of$500. for August is
A) required total financing of $2,500.
B) required total financing of $500.
C) excess cash balance of $500.
D) excess cash balance of $5,500.

Question

Quizplus · Accepted Answer

To calculate the ending cash balance, we need to start with the beginning cash balance of $500, add the total cash receipts of $10,000, and subtract the total cash disbursements of $8,000, and the depreciation expense of $1,000.
$500 + $10,000 - $8,000 - $1,000 = $1,500
Since the minimum cash balance is $3,000, the firm requires financing of $1,500 - $3,000 = -$1,500. However, since the firm already has a beginning cash balance of $500, it only requires additional financing of $1,500 - $500 = $1,000. Therefore, the answer is B.

In the Month of August, a Firm Had Total Cash