Question

Ivanhoe Company has the following cash budget information available for the month of August:

Beginning cash balance		$134,000
Cash receipts from sales and collections on account		111,000
Collection of note receivable and interest		7,300
Cash disbursements for operating expenses		95,600

If the company has a policy of maintaining an end of the month cash balance of $103,000, determine the amount the company would have to borrow or the amount of excess cash it will have to invest in August.

The company would have to invest

Answer 1

Cash Budget
Beginning cash balance	134,000
Cash receipts from sales and collections on account	111,000
Collection of note receivable and interest	7,300
Total available cash	252,300
Cash disbursements for operating expenses	-95,600
Preliminary cash balance	156,700
Excess cash to be invested	-53,700
Ending cash balance	103,000

The company would have to invest

$53,700

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