Asked by Antoine Miquel on Apr 25, 2024
Verified
Bries Corporation is preparing its cash budget for January. The budgeted beginning cash balance is $18,400. Budgeted cash receipts total $185,000 and budgeted cash disbursements total $188,800. The desired ending cash balance is $30,400.To attain its desired ending cash balance for January, the company should borrow:
A) $15,800
B) $0
C) $30,400
D) $45,000
Cash Budget
A forecast of cash inflows and outflows over a specified period, used for cash flow management.
Budgeted Disbursements
Projected cash outflows or expenditures planned by a business for a specific period, used in cash flow management.
Desired Balance
The target balance that an individual or organization aims to achieve in their financial account or budget.
- Assess predicted sales, cash received, and cash disbursed.
Verified Answer
Total cash receipts - Total cash disbursements = $185,000 - $188,800 = -$3,800
This negative number means that the company is short of cash and needs to borrow to cover its expenses and attain its desired ending cash balance of $30,400.
The amount to borrow is thus:
Desired ending cash balance - (Beginning cash balance + Total cash receipts - Total cash disbursements)
= $30,400 - ($18,400 + $185,000 - $188,800)
= $15,800
Therefore, the company should borrow $15,800 to meet its cash needs for January.
Learning Objectives
- Assess predicted sales, cash received, and cash disbursed.
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