Question

bookworm publishers requires an ending cash balance of at least 5,000 and can b orrow from a line of credit in 1000 increments. How much cash does bookwork publishers need to borrow for october

Answer 1

Answer: $8,000

Explanation:

Find the cash balance at the end of October.

Cash disbursement:

= Direct Materials Cash Disbursements + Direct Labor Cash Disbursements + MOH Cash Disbursements + Operating Expenses Cash Disbursements + Capital Expenditures Cash Disbursements

= 62,000 + 45,000 + 43,000 + 85,000 + 125,000

= $360,000

Cash receipts:

= Opening balance + Expected cash collections

= 7,000 + 350,000

= $357,000

Cash balance :

= Cash receipts - Cash disbursement

= 357,000 - 360,000

= -$3,000

The cash balance needs to be at least $5,000, they need to borrow:

= Amount needed - Cash balance

= 5,000 - (-3,000)

= 5,000 + 3,000

= $8,000