Question

Freet Inc. is preparing its cash budget for November. The budgeted beginning cash balance is $23,000. Budgeted cash receipts total $114,000 and budgeted cash disbursements total $89,000. The desired ending cash balance is $65,000. The company can borrow up to $110,000 at any time from a local bank, with interest not due until the following month. Required: Prepare the company's cash budget for November in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.

Answer 1

Particulars Amount

Beginning cash balance $23,000

Add: Cash balance $114,000

Total cash available $137,000

Less: Cash Disbursement $ 89,000

Excess (Deficiency) of cash $48,000

available over disbursements

Borrowings $17,000

($65,000 - $48,000)

Ending cash balance $65,000