Question

Southland Company is preparing a cash budget for August. The company has $18,400 cash at the beginning of August and anticipates $123,600 in cash receipts and $137,300 in cash payments during August. Southland Company wants to maintain a minimum cash balance of $10,000. To maintain the minimum cash balance of $10,000, the company must borrow:

Answer 1

Cash Budget
Particulars	Amount
Balance at the beginning	$         18,400
Add: Cash receipts	$      123,600
Less: Cash Payments	$      137,300
Balance before any borrowings	$           4,700
Desired closing cash balance	$         10,000
Amount to be borrowed	$           5,300

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