Question

Roman Company is preparing its cash budget for the upcoming month. The budgeted beginning cash balance is expected to be​ $37,000. Budgeted cash receipts are​ $101,000, while budgeted cash disbursements are​ $129,000. Roman Company wants to have an ending cash balance of​ $40,000. How much would Roman Company need to borrow to achieve its desired ending cash​ balance?

Answer 1

Roman Company need to borrow of $31,000 to achieve its desired ending cash​ balance.

Step-by-step explanation:

In Roman Company:

Budgeted Ending cash balance = Budgeted Beginning cash balance + Budgeted cash receipts - Budgeted cash disbursements = $37,000 + $101,000 - $129,000 = $9,000

Roman Company wants to have an ending cash balance of​ $40,000,

The company need to borrow: $40,000 - $9,000 = $31,000 to achieve its desired ending cash​ balance.