Question

Sedita Inc. is working on its cash budget for July. The budgeted beginning cash balance is $17,000. Budgeted cash receipts total $176,000 and budgeted cash disbursements total $175,000. The desired ending cash balance is $47,000. The excess (deficiency) of cash available over disbursements for July will be:

Answer 1

The excess cash available over disbursement in July = $18,000

Step-by-step explanation:

To determine the excess (deficiency), we have to calculate the total cash available in July, then subtract the disbursements to find the difference. This is done as follows:

Beginning cash balance = $17,000

Budgeted total cash receipt = $176,000

Total cash available = Beginning cash balance + budgeted receipt

= 17,000 + 176,000 = $193,000.

Total cash disbursements = $175,000

Excess (deficiency) of available cash = Total available cash - Total cash disbursements

∴ Excess (deficiency) of available cash = 193,000 - 175,000 = $18,000.

Also, if we were asked to find how much of cash that will be needed for financing, in order to achieve an ending balance of $47,000, we will simply calculate the difference between the ending cash and available cash as follows: 47,000 - 18,000 = $29,000