Clancy's Has a Beginning Cash Balance of $27 and a Net

question 31

Multiple Choice

Clancy's has a beginning cash balance of $27 and a net cash inflow for the quarter of −$52.Company policy is to maintain a minimum cash balance of $20 and borrow only the amount that is necessary to maintain that balance.How much,if any,does the firm need to borrow this quarter?

• A)$17
• B)$52
• C)$45
• D)$25
• E)$0

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Definitions:

Warranty Accrual Method

An accounting method used to estimate the future costs of warranties and allocate them to the period in which the related revenue is recognized.

Warranty Expense

Represents the cost that a company expects to incur under its warranty obligations to repair or replace products that it has sold.

Washing Machines

Home appliances used for washing laundry, such as clothing and sheets.

Premium Expense

The cost associated with purchasing an insurance policy or other similar financial products.