Question

Brockman Company is preparing its cash budget for the upcoming month. The budgeted beginning cash balance is expected to be​ $35,000. Budgeted cash disbursements are​ $127,000, while budgeted cash receipts are​ $126,000. Brockman Company wants to have an ending cash balance of​ $50,000. How much would Brockman Company need to borrow to achieve its desired ending cash​ balance?

Answer 1

Required loan = $16000

Step-by-step explanation:

given data

beginning cash balance = ​ $35,000

cash disbursements = $127,000

cash receipts = $126,000

ending cash balance wants = $50,000

to find out

How much would Brockman Company need to borrow

solution

we get here Ending cash balance that is express as

Ending cash balance = beginning cash balance + cash receipts - Cash disbursement ..........................1

put here value we get

Ending cash balance = $35000 + $126000 - $127000

Ending cash balance = $34000

and required loan to borrow will be here as

required loan = ending cash balance wants - Ending cash balance .................2

put here value we get

Required borrow = $50000 - $34000

Required loan = $16000