For a recent period,a firm collected $38,200 on accounts receivable,paid $19,700 to suppliers on trade credit,paid $12,000 in cash expenses,purchased for cash a $42,000 piece of equipment that will be depreciated straight-line to zero over 4 years,and had $59,000 of sales of which 15% were cash sales.The firm also paid $13,500 in taxes and interest.The beginning cash balance was $11,300.How much did the firm need to borrow in order to maintain a minimum cash balance of $10,000?

Question

Quizplus · Accepted Answer

Cash balance = $11,300 + 38,200 − 19,700 − 12,000 − 42,000 + (0.15 × $59,000) − 13,500 − 10,000 = −$38,850; Thus, the firm needs to borrow $38,850.

For a Recent Period,a Firm Collected $38,200 on Accounts Receivable,paid