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Homework answers / question archive / DEF Corporation has a cash balance of $18,000 on May 1
DEF Corporation has a cash balance of $18,000 on May 1. DEF must maintain a minimum cash balance of $10,000. During May, expected cash receipts are $98,000. Cash disbursements during the month are expected to total $112.000. During May the company will need to borrow: $8,000 $2,000 $6,000 $4,000
Cash to be borrowed borrowed = Cash balance available on 1st May - cash balance need to be maintained+ cash receipts during month - cash disbursement during month
Cash to be borrowed borrowed = $ 18,000 - $ 10,000 + $ 98,000 - $ 112,000
Cash to be borrowed borrowed = $ (6000)
i.e., $ 6,000 was deficit.
Therefore, the amount need to be borrowed is $ 6,000.
