Question

The expected cash balance at January 1, 2016, is $62,000. Brewster wants to maintain a cash balance at the end of each month of at least $60,000. Short-term borrowings at 1% interest per month will be used to accomplish this, if necessary. Borrowings (in multiples of $1,000) will be made at the beginning of the month in which they are needed, with interest for that month paid at the end of the month. Prepare a cash budget for the quarter ended March 31, 2016.

Answer 1

Answer: Check attachment

Explanation:

The cash budget for the quarter ended March 31, 2016 has been attached.

Note that in the calculation that is attached:

Cash available = Beginning cash balance + Cash receipt + Short term borrowing

Ending balance = Cash available - Total cash disbursement

Check attachment for further details and explanation.