Question

Primative Company is preparing a cash budget for February. The company has $11,600 cash at the beginning of February and anticipates $30,400 in cash receipts and $35,300 in cash disbursements during February. Primative Company has an agreement with its credit union to maintain a cash balance of no less than $10,000. As of January 31, the company owes $15,000 to the credit union. To maintain the $10,000 agreed to balance, during February the company must: Multiple Choice 0 Repay $6,700. 0 Borrow $3,300. 0 Repay $3,300 0 Borrow $4,900. 0 Borrow $10,000

Answer 1

Borrow $3,300
Working
Beginning cash balance	$11,600
Add: Cash receipts	$30,400
Total cash available	$42,000
Less: Cash disbursements	$35,300
Preliminary cash balance	$6,700
Borrow	$3,300
Ending cash balance	$10,000