Answer:
Save additional $17,500 or reduce disbursement by that much
Explanation:
The cash budget of the company would be as follows:
May 31 owed to be bank ($15,000)
June 1 opening cash balance $12,000
June expected cash receipts $30,000
June expected cash disbursement ($34,500)
Net cash flow at the end of June (excluding bank): $7,500
Net cash flow (including bank): $7,500 - $15,000 = ($7,500)
Thus, the company will be owing the bank $7,500 by the end of June.
To maintain the minimum $10,000 positive balance with the bank, the company would need to payback the $7,500 which will be owed by the end of June, and make additional deposit of $10,000.
Total deposit required = $7,500 + $10,000 = $17,500.
This can be achieved by reducing expected disbursement by $17,500 or via other means.
