The ABC Company has made the following monthly estimates of cash receipts and cash disbursements when preparing cash budgets for the next twelve months. ABC has beginning cash on hand of $20,000 and wants to maintain this minimum cash level throughout the next year.
Cash Cash
Month Receipts Disbursements
January $100,000 $100,000
February $90,000 $110,000
March $80,000 $110,000
April $100,000 $150,000
May $120,000 $180,000
June $160,000 $180,000
July $200,000 $180,000
August $250,000 $180,000
September $250,000 $150,000
October $200,000 $110,000
November $140,000 $100,000
December $100,000 $100,000
A. Determine whether or not ABC will have a cash need during the next year.
B. If the company does need cash, in which month will it need the cash?
C. What is the most cash the company will need to borrow during the year?
D. Will the company have paid back all of its borrowings by the end of the year?
Submit your calculations and answers in an Excel spreadsheet please.