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Cash Shortages

Please help me with this question. Thanks.

Information for June:

cash receipts $542,000
beginning cash balance 10,000
cash payments 560,000
desired ending cash balance 50,000

If there is shortage, the company borrows money from the bank. All cash is borrowed at the beginning of the month at $10,000 increments and interest is paid monthly at 1% on the first day of the following month. The company had no debt before June 1st. The shortage or surplus of cash before considering cash borrowed in June would be...?

Explain how to solve this.

Solution Preview

Hi,

Please see the response to your posting as below:

Net effect on cash balance = Cash receipts -cash payments ...

Solution Summary

Solution contains calculations of shortage or surplus of cash before considering cash borrowed in the month.

$2.19