The following information was taken from Mitchell Company cash budget for the month of July: $$\begin{array} { l r }
\text { Beginning cash balance } & \$ 100,000 \
\text { Cash receipts } & 96,000 \
\text { Cash disbursements } & 136,000
\end{array}$$ If the company has a policy of maintaining end of the month cash balance of $100,000, the amount the company would have to borrow is
A) $40,000.
B) $20,000.
C) $60,000.
D) $24,000.

Question

The following information was taken from Mitchell Company cash budget for the month of July: $$\begin{array} { l r } 
\text { Beginning cash balance } & \$ 100,000 \
\text { Cash receipts } & 96,000 \
\text { Cash disbursements } & 136,000
\end{array}$$ If the company has a policy of maintaining end of the month cash balance of $100,000, the amount the company would have to borrow is
A) $40,000.
B) $20,000.
C) $60,000.
D) $24,000.

Quizplus · Accepted Answer

The company has a beginning cash balance of $100,000, cash receipts of $96,000, and cash disbursements of $136,000. This results in a net cash outflow of $40,000. To maintain an end of the month cash balance of $100,000, the company would have to borrow $40,000.

The Following Information Was Taken from Mitchell Company Cash Budget