Neco Model Questions Vol1 2022 Financial Accounting Question 42

A municipal council prepares a cash budget for the upcoming month. The opening cash balance is \(\text{₦}400,000\). Cash receipts are: tax revenue \(\text{₦}2,400,000\) received in two equal instalments (first half at the start of the month, second half at the end), a grant of \(\text{₦}800,000\) received at the start, and other income of \(\text{₦}200,000\) received at the end. Cash payments are: salaries \(\text{₦}2,200,000\) paid early in the month, supplies \(\text{₦}500,000\), loan interest \(\text{₦}150,000\) and capital expenditure \(\text{₦}400,000\) paid later in the month. The council must maintain a minimum cash balance of \(\text{₦}600,000\) at any time. Calculate the amount of short‑term borrowing required to meet this minimum balance.