During September the capital expenditure budget indicates a $420000 purchase of equipment. The ending September cash balance from operations is budgeted to be $60000. The company wants to maintain a minimum cash balance of $30000. What is the minimum cash loan that must be planned to be borrowed from the bank during September?
A) $330000
B) $360000
C) $450000
D) $390000

Question

Quizplus · Accepted Answer

The company wants to maintain a minimum cash balance of $30000. 
The ending cash balance from operations is budgeted to be $60000.
Therefore, the minimum cash that must be planned to be borrowed from the bank during September is:
Minimum cash balance required = $30000
Minus: Ending September cash balance from operations = $60000
Minus: Capital expenditure budget = $420000
= -$420000 + $60000 + $30000
= -$330000
The company must plan to borrow a minimum of $330000 from the bank in September. 
Therefore, the correct answer is D.

During September the Capital Expenditure Budget Indicates a $420000 Purchase