Question

The following information was taken from Bounders Company cash budget for the month of July: Beginning cash balance $50,000 Cash receipts 48,000 Cash disbursements 68,000 If the company has a policy of maintaining an end of the month cash balance of $50,000, how much will the company need to borrow during July?

Answer 1

$20,000

Explanation:

Balance carried forward (c/f) = $ 50,000

Cash receipts (add) = $ 48,000

Cash disbursement (subtract) = $ (68,000)

Cash balance = $ 30,000

Since the cash balance is $ 30,000, the company will need to borrow $20,000 during July in order to align with company policy.

NB : Please note that $ (68,000) mean - $ 68,000.