For 2011, Raster Graphics forecasts cash receipts of $405,000 and cash disbursements of $430,000. If the beginning cash balance is $35,000 and the desired ending balance is $21,000, how much must Raster borrow during the year?

Question

Quizplus · Accepted Answer

The total cash shortfall for the year is the difference between the cash receipts and cash disbursements: 
$430,000 - $405,000 = $25,000

However, Raster only needs to borrow enough to reach the desired ending balance: 
$35,000 - $21,000 = $14,000

Since $25,000 is more than the desired ending balance, Raster only needs to borrow $14,000 to meet its cash needs for the year. Therefore, the correct answer is C) $11,000 (the closest answer choice to $14,000).

For 2011, Raster Graphics Forecasts Cash Receipts of $405,000 and Cash