Sparks Corporation has a cash balance of $17,700 on April 1. The company must maintain a minimum cash balance of $14,500. During April, expected cash receipts are $65,000. Cash disbursements during the month are expected to total $77,500. Ignoring interest payments, during April the company will need to borrow:

A) $9,300
B) $5,200
C) $14,500
D) $12,500

Question

Tamahene Benavidez · Accepted Answer

Final Answer : A, Explanation :  The company starts with $17,700, expects to receive $65,000, and plans to spend $77,500. So, the net cash flow is $17,700 + $65,000 - $77,500 = $5,200. To maintain a minimum balance of $14,500, they need $14,500 - $5,200 = $9,300.

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