Question

Bustillo Inc. is working on its cash budget for March. The budgeted beginning cash balance is $53,000. Budgeted cash receipts total $137,000 and budgeted cash disbursements total $132,000. The desired ending cash balance is $76,000. To attain its desired ending cash balance for March, the company needs to borrow:
A. $0
B. $4,000
C. $56,000
D. $30,000

Answer 1

Answer:

$18,000 is the borrowings the company need to make to have the desired ending cash balance

Explanation:

In this question, we are asked to to calculate the amount of money the company needs to borrow to attain its desired ending cash balance in the month of March.

We proceed as follows;

We can find the value of loan that the company need to borrow using the following equation:

Ending cash balance = beginning cash balance + cash receipts - cash disbursements + cash borrowings

So, we have: $76,000= $53,000+ $137,000-$132,000$+ cash borrowings

Cash borrowings = $76,000 - $53,000-$5,000 = $18,000

Cash borrowings = $18,000 must be the borrowings the company need to make to have the desired ending cash balance.