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Arisa
2 months ago
9

Great Skot expects to have cash receipts in June of $532,160. Skot’s cash disbursements in June are $581,720, including an inter

est payment on a bond issue of $32,000. If Skot wishes to maintain a cash balance of $40,000, how much will Skot have to borrow if it started the month with a cash balance of $52,000?
a.$37,560
b. Surplus of $2,440. Will not have to borrow
c.$5,560
d. Surplus of $34,440. Will not have to borrow
Business
1 answer:
Katen [3.5K]2 months ago
6 0

Answer:

a. $37,560

Explanation:

The ending cash balance of $40,000 = Cash at start of month $52,000 + cash inflows during June of $532,160 - cash outflows of $581,720 +  New borrowing

⇔ $40,000 = $2,440 + new borrowing

⇔ New borrowing becomes  $40,000 - $2,440 = $37,560

To maintain a cash balance of $40,000, Skot must borrow $37,560 starting with $52,000.

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