Question

X Company has the following budgeted cash flows for January

Cash collections		$45,000
Cash Payments
Inventory		17,000
Operating Expenses		13,000
Capital Expenditures		18,000

If the cash balance is $5,000 on January 1 and the company wants to maintain a minimum cash balance of $5,000, what is the budgeted cash borrowing for January?

Answer 1

	Cash Budget
	opening balance				5,000
	Add:Cash collections				45,000
	total cash receipts				50,000
	cash disbursements
	inventory				17,000
	operating expense				13,000
	capital expenditures				18,000
	total cash disbursement				48,000
	Excess(Deficiency)				2,000
	Financing:
	Borrowing				3,000
	interest				0
	repayment				0
	total financing				0
	cash balance at year end				5,000
	answer- $3,000 budgeted cash borrowing