Question

Laurey Inc. is working on its cash budget for May. The budgeted beginning cash balance is $45,000. Budgeted cash receipts total $129,000 and budgeted cash disbursements total $124,000. The desired ending cash balance is $60,000.

How much does the company need to borrow to attain its desired ending cash balance for May?

Answer 1

the company needs to obtain $10,000 from external sources to attain its desired cash balance for May.

Step-by-step explanation:

additional funds needed:

- budgeted beginning cash balance = $45,000

- budgeted cash receipts = $129,000

+ budgeted cash disbursements = $124,000

+ desired ending cash balance = $60,000

AFN = $124,000 + $60,000 - $45,000 - $129,000 = $10,000,

the company needs to obtain $10,000 from external sources to attain its desired cash balance for May.