Question

Bries Corporation is preparing its cash budget for January. The budgeted beginning cash balance is $18,500. Budgeted cash receipts total $185,500 and budgeted cash disbursements total $189,000. The desired ending cash balance is $30,500. To attain its desired ending cash balance for January, the company should borrow:

Answer 1

Answer:

$15,500

Explanation:

Whenever there is a movement in cash over a given period, it is usually as a result of receipts and disbursement over the period and can be denoted as;

Opening balance + Receipts - Disbursements = Closing balance.

However, if the company intends to maintain closing balance, the amount to be borrowed would form part of the receipts.

$18,500 + receipts - $189,000 = $30,500

Receipts = $30,500 + $189,000 - $18,500

Receipts = $201,000

Given budgeted cash receipts, totalled $185,500, then amount to borrow

= $201,000 - $185,500

= $15,500