Question

Mosbey Inc. is working on its cash budget for June. The budgeted beginning cash balance is $18,000. Budgeted cash receipts total $175,300 and budgeted cash disbursements total $204,000. The desired ending cash balance is $49,000, and the company borrows in increments of $500 only. The amount Mosbey Inc needs to borrow for June will be:

Answer 1

Mosbey Inc budgeted opening cash balance = $ 18000 and budgeted cash receipts = $ 175300 ,

so total budgeted cash available = $18000 + 175300 = $ 193,300.

Here the budgeted cash disbursement = $ 204,000 and desired cash balance = $ 49,000, so the total cash required = $ 253000.

So additional cash required to be borrowed = Total Budgeted cash required - cash available before borrowing .

Cash required to be borrowed = $ 253000 - $ 193300

Cash required to be borrowed = $ 59700.

But here the cash can be borrowed in increments of $ 500 only, thus the budget cash to be borrowed in June = $ 60,000.