Question

Zhang Industries is preparing a cash budget for June. The company has $28,000 cash at the beginning of June and anticipates $95,000 in cash receipts and $118,790 in cash disbursements during June. The company has no loans outstanding on June 1. Compute the amount the company must borrow, if any, to maintain a $20,000 cash balance.

Answer 1

The correct answer is $15,790.

Step-by-step explanation:

According to the scenario, the computation of the given data are as follows:

We can calculate the amount of borrow by using following formula:

Amount of borrow = Desired ending balance - Balance before adjustment

where, Balance before adjustment = Opening balance + Cash receipts - Cash disbursement

= $28,000 + $95,000 - $118,790

= $4,210

So, by putting the value, we get

Amount of borrow = $20,000 - $4,210 = $15,790