For June, Snake River Rafting will have cash receipts of $68,000 and cash disbursements of $85,000. If its beginning cash is $9,000 and its desired reserve is $3,000, what will be its shortfall in cash for the month?

A) There is no shortfall in cash but an excess of cash.
B) -$11,000
C) -$8,000
D) -$6,000


Answer: B
Explanation: B) Its net cash flow for the month is cash receipts minus cash disbursements = $68,000 - $85,000 = -$17,000. Its ending cash is net cash flow plus beginning cash = -$17,000 + $9,000 = -$8,000. Its short-fall is ending cash minus reserves = -$8,000 - $3,000 = -$11,000.

Business

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