Question

Pixi Boutique will have cash receipts of​ $57,000 in December and cash disbursements of​ $51,000 for this month. If its beginning cash is​ $12,000 and its desired reserve is​ $9,000, what will its excess be for​ December?
A. There is no excess but a shortfall.
B.​ $6,000
C.​ $9,000
D. ​$18,000

Answer 1

Answer:

The excess cash balance is $9000 and option C is the correct answer.

Explanation:

The excess cash balance is the ending cash balance for the month less the desired reserve. If the desired reserve is more than the ending balance, there is a shortfall.

The ending cash balance for a month can be calculated as follows,

Ending cash balance = Opening cash balance + Receipts - Disbursements

Ending Cash balance = 12000 + 57000 - 51000 = $18000

The excess cash balance is = 18000 - 9000 = $9000