Question

Do It! Review 21-4 Batista Company management wants to maintain a minimum monthly cash balance of $19,100. At the beginning of April, the cash balance is $22,700, expected cash receipts for April are $245,800, and cash disbursements are expected to be $257,700. How much cash, if any, must be borrowed to maintain the desired minimum monthly balance? Amount to be borrowed to maintain the desired minimum monthly balance

Answer 1

Inorder to find the cah should be borrowed/not prepare table as below.

To the begning Balance:

-Add expected receipts as it increases cash in hand

-Less Payments expected as end up lossing money from hand

-Do above calculation to get actual Closing cash balance

Backward Calculation is done to get amount borrowed as Balancing figure. Or Just Deduct closing balance from Minimum Required, ie,19100-closing Bal

April Cash Budget

Begining Bal.	22,700
Add:Expected Cash Receipts	245,800
Less: Distributions	257,700
(B) Bal fig: TO BE BORROWED (19,100(mini)-10800)	8300
Closing(22700+245800-257700)	10800