Bentonville Medical Center has provided you with the following budget information for July:
Cash collections $ \$ 918,00 $
July 1 cash balance 32,000
Cash disbursements $ 1.020 .400 $
Bentonville has a policy of maintaining a minimum cash balance of $30,000 and borrows only in $1,000 increments.How much will Bentonville borrow in July?

Question

Bentonville Medical Center has provided you with the following budget information for July:
Cash collections                        $ \$ 918,00 $ 
July 1 cash balance                    32,000
Cash disbursements                  $ 1.020 .400 $
Bentonville has a policy of maintaining a minimum cash balance of $30,000 and borrows only in $1,000 increments.How much will Bentonville borrow in July?

Quizplus · Accepted Answer

To determine how much Bentonville will need to borrow in July, we need to calculate the ending cash balance.

Starting cash balance: $32,000 
Add cash collections: $918,000 
Total cash available: $950,000 
Subtract cash disbursements: $1,020,400 
Ending cash balance: -$70,400

Since the ending cash balance is negative, Bentonville will need to borrow enough to bring their cash balance back up to the minimum of $30,000. We can calculate the borrowing needed as:

Minimum cash balance - Ending cash balance = Borrowing needed
$30,000 - (-$70,400) = $100,400

However, Bentonville can only borrow in increments of $1,000, so the rounded borrowing amount will be $101,000 (the next highest increment after $100,400). Therefore, the best choice is D) $101,000.

Bentonville Medical Center Has Provided You with the Following Budget $918,00 \$ 918,00 $918,00

Bentonville Medical Center Has Provided You with the Following Budget $\$ 918,00$