This is assuming accountant has requested a minimun cash balance of $7k at the s
ID: 2388724 • Letter: T
Question
This is assuming accountant has requested a minimun cash balance of $7k at the start of each month. All borrowings, repayments, investments are made in even $1k amounts. Please see far below for chart...
July
August
September
Total
Cash Balance Beginning
$7,400
$7,200
x
x
Cash Receipts
16,400
20,200
x
x
Total cash available
$23,800
$27,400
41,000
77,800
Cash Disbursments:
Payments on account
2,600
7,800
11,400
x
Wage Expenses
10,000
x
12,400
34,600
Overhead Costs
8,000
9,200
8,800
26,000
Total disbursments
20,600
x
32,600
x
Cash excess
$3,200
x
x
x
Min. cash bal.
-7,000
-7,000
x
x
Cash available
($3,800)
-8,800
x
-11,600
Financing:
Borrowings
4,000
x
-1,000
x
Sell investments
0
0
x
x
Receive interest
0
0
x
-20
Ending cash balance
7,200
x
x
7,380
July
August
September
Total
Cash Balance Beginning
$7,400
$7,200
x
x
Cash Receipts
16,400
20,200
x
x
Total cash available
$23,800
$27,400
41,000
77,800
Cash Disbursments:
Payments on account
2,600
7,800
11,400
x
Wage Expenses
10,000
x
12,400
34,600
Overhead Costs
8,000
9,200
8,800
26,000
Total disbursments
20,600
x
32,600
x
Cash excess
$3,200
x
x
x
Min. cash bal.
-7,000
-7,000
x
x
Cash available
($3,800)
-8,800
x
-11,600
Financing:
Borrowings
4,000
x
-1,000
x
Sell investments
0
0
x
x
Receive interest
0
0
x
-20
Ending cash balance
7,200
x
x
7,380
Explanation / Answer
Cash excess - Minimum Cash Balance = Cash Available
For August:
Cash Available = -8800
Minimum Cash Balance = 7,000
Cash excess - 7,000 = -8800
Cash excess = -8800 + 7000 = -1800
Cash excess = Total Cash Available - Total Disbursements
-1800 = 27,400 - Total Disbursements
Total Disbursements - 1800 = 27,400
Total Disbursements = 27,400 + 1800 = 29,200
Total Disbursements = Wages Expense + Overhead Costs + Payments on Account
29,200 = Wages Expense + 9,200 + 7,800
Wages Expense = 29,200 - 9,200 - 7,800 = 12,200
Borrowings + Cash excess = Minimum Cash Balance
Borrowings - 1800 = 7,000
Borrowings = 8,800
Borrowings rounded up to the next 1,000 = 9,000
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