A company is developing its cash budget for November. The company has determined
ID: 2393020 • Letter: A
Question
A company is developing its cash budget for November. The company has determined that the budgeted beginning cash balance is $24,000. Budgeted cash receipts total $115,000 and budgeted cash disbursements total $88,000. The desired ending cash balance is $70,000. The company can borrow up to $120,000 at any time from a local bank, with interest not due until the following month Required: Prepare the company's cash budget for November in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance. Cash Budget November Beginning cash balance Excess (deficiency) of cash available over disbursements Borrowings Ending cash balanceExplanation / Answer
A Company
Cash Budget
November
Beginning Cash Balance
$ 24,000.00
Budgeted Cash Receipts
$ 115,000.00
Total Cash Available
$ 139,000.00
Cash Disbursements
$ 88,000.00
Excess (Deficiency) of Cash available over Disbursements
$ 51,000.00
Borrowings
$ 19,000.00
Ending Cash Balance
$ 70,000.00
Working note 1 (Calculation of Borrowings required)
Calculation of Borrowings
Excess (Deficiency) of Cash available over Disbursements
$ 51,000.00
Required Cash Balance
$ 70,000.00
Borrowings to make cash equal to required balance
$ 19,000.00
A Company
Cash Budget
November
Beginning Cash Balance
$ 24,000.00
Budgeted Cash Receipts
$ 115,000.00
Total Cash Available
$ 139,000.00
Cash Disbursements
$ 88,000.00
Excess (Deficiency) of Cash available over Disbursements
$ 51,000.00
Borrowings
$ 19,000.00
Ending Cash Balance
$ 70,000.00
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