Sparks Corporation has a cash balance of $18,000 on April 1. The company must maintain a minimum cash balance of $10,000. During April, expected cash receipts are $98,000. Cash disbursements during the month are expected to total $112,000. Ignoring interest payments, during April the company will need to borrow:

Sparks Corporation has a cash balance of $18,000 on April 1. The company must maintain a minimum cash balance of $10,000. During April, expected cash receipts are $98,000. Cash disbursements during the month are expected to total $112,000. Ignoring interest payments, during April the company will need to borrow:

Multiple Choice

• $6,000

  Correct
• $2,000
• $4,000
• $8,000

Explanation

Beginning cash balance	$	18,000
Add cash receipts		98,000
Total cash available		116,000
Less cash disbursements		112,000
Excess (deficiency) of cash available over disbursements	$	4,000

The company will need to borrow $6,000 to maintain its minimum cash balance of $10,000.