Question
The ABC Company has made the following monthly estimates of cash receipts and cash disbursements when preparing cash budgets for the next twelve months.ABC has
The ABC Company has made the following monthly estimates of cash receipts and cash disbursements when preparing cash budgets for the next twelve months.ABC has beginning cash on hand of $20,000 and wants to maintain this minimum cash level throughout the next year.
CashCash
MonthReceiptsDisbursements
January$110,000$130,000
February$95,000$105,000
March$95,000$145,000
April$105,000$140,000
May$135,000$165,000
June$165,000$165,000
July$200,000$185,000
August$245,000$190,000
September $245,000$165,000
October$180,000$120,000
November$150,000$120,000
December$100,000$110,000
A.Will ABC need to borrow cash during the next year?
B.If the company does need cash, in which month will it first need to borrow cash?
C.What is the highest amount the company will have to borrow in total (the highest amount its loan balance will be during the year)?
D.Will the companyhave paid back all of its borrowings by the end of the year?
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