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lys-0071 [83]
3 years ago
5

Zolezzi Inc. is preparing its cash budget for March. The budgeted beginning cash balance is $27,000. Budgeted cash receipts tota

l $104,000 and budgeted cash disbursements total $87,000. The desired ending cash balance is $70,000. The company can borrow up to $90,000 at any time from a local bank, with interest not due until the following month. Required: Prepare the company's cash budget for March in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.
Business
1 answer:
Lunna [17]3 years ago
6 0

Answer:

                                                     Zolezzi Inc.

                                          Cash budget for March

                                                       Amount in $'000                          

Opening balance                                27

Add;

Cash receipts                                    104      

Less;

Cash disbursements                       <u>  (87)</u>                

Ending balance                                  44  

Amount to be borrowed                   <u> 26</u>  

Desired ending balance                   <u> 70 </u>                                                                                                

Explanation:

The cash budget a forecast of the expected movement in cash balance. This is as a result of expected cash receipts and disbursements and may be expressed mathematically as

opening cash balance + cash receipts - Cash disbursed = closing cash balance

27 + 104 - 87 = ending balance

Ending balance = 44

Desired ending balance = 70

Amount to be borrowed = 70 - 44

= 26

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