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During September, the capital expenditure budget indicates a $450000 purchase of equipment. The ending September cash balance from operations is budgeted to be $70000. The company wants to maintain a minimum cash balance of $38000. What is the minimum cash loan that must be planned to be borrowed from the bank during September

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Zviko

Answer:

the minimum cash loan that must be planned to be borrowed from the bank during September is $418,000 .

Explanation:

The cash loan that must be planned to be borrowed from the bank is determined by preparing a cash budget

Snippet of the Cash Budget Reconciliation Section

Cash Balance from Operation     $70000

Less Purchase of Equipment  ($450,000)

Balance                                     ($380,000)

Less Desired Balance                 ($38000)

Cash loan                                    $418,000