US CMA Part 1 · Chapter 2 · Question 17 of 30
A company's cash budget for April shows a beginning cash balance of $35,000, cash receipts of $238,000 and cash disbursements of $251,000. Policy is to maintain a minimum cash balance of $30,000, borrowing from a credit line in multiples of $5,000. How much should be borrowed in April?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) $10,000
Explanation
Cash before financing = $35,000 + $238,000 - $251,000 = $22,000. The shortfall against the $30,000 minimum is $8,000. Rounding up to the next multiple of $5,000 gives borrowing of $10,000, leaving an ending balance of $32,000.
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