Question

Bries Corporation is preparing its cash budget for January. The budgeted beginning cash balance is $19,100. Budgeted cash receipts total $188,500 and budgeted cash disbursements total $190,200. The desired ending cash balance is $31,100. To attain its desired ending cash balance for January, the company should borrow:

Answer 1

The company should borrow $13700 to attain its desired ending balance for cash for January.

Step-by-step explanation:

The desired cash balance is the cash balance at the end of the period that is required by a firm. The amount in excess or deficit of the desired balance can be calculated by calculating the end cash balance and subtracting the desired cash balance from it.

The ending cash balance for the period can be calculated as follows,

Ending cash balance = Opening balance + Receipts - Disbursements

Ending cash balance = 19100 + 188500 - 190200 = $17400

The excess/deficit is = 17400 - 31100 = -$13700 or deficit of $13700

Thus, the company should borrow $13700 to attain its desired ending balance for cash for January.