Sparks Corporation has a cash balance of $15,300 on April 1. The company must maintain a minimum cash balance of $12,500. During April, expected cash receipts are $61,000. Cash disbursements during the month are expected to total $71,500. Ignoring interest payments, during April the company will need to borrow: Multiple Choice $7,700 $12,500 $10,500 $4,800

A. Cash borrow = $7,700

Explanation:

Given,

The company must maintain a minimum cash balance of $12,500.

We know,

Ending cash balance = Beginning cash balance + Cash receipts - Cash disbursements + Cash borrow

Given,

Ending cash balance = $12,500

Beginning cash balance = $15,300

Cash receipts = $61,000

Cash disbursements = $71,500

Cash borrow = ?

Putting the values into the formula, we can get

$12,500 = $15,300 + $61,000 - $71,500 + Cash borrow

Or, $12,500 - ($15,300 + $61,000 - $71,500) = Cash borrow

Or, $12,500 - $15,300 - $61,000 + $71,500 = Cash borrow

Or, $84,000 - $76,300 = Cash borrow

Or, $7,700 = Cash borrow

Or, Cash borrow = $7,700.

Therefore, Option A is the answer.

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