If projected net cash outflow for January is ($6,500), the beginning cash balance is $16,000, the minimum cash balance is $5,000, and the beginning loan balance is $4,500, what will be the cash balance on the pro forma cash budget at the end of January?
A) $5,000
B) $10,000
C) $12,000
D) $4,500

Question

Quizplus · Accepted Answer

The cash balance at the end of January is $10,000. This is calculated by adding the beginning cash balance of $16,000 to the projected net cash outflow of ($6,500). The result is $9,500. However, the minimum cash balance is $5,000. Therefore, the company will need to borrow $4,500 to maintain the minimum cash balance. The ending cash balance will be $10,000 ($9,500 + $4,500).

If Projected Net Cash Outflow for January Is ($6,500), the Beginning