Question

Zoo Inc. is preparing its cash budget for March. The budgeted beginning cash balance is $20,000. Budgeted cash receipts total $116,000 and budgeted cash disbursements total $87,000. The desired ending cash balance is $60,000. The company can borrow up to $110,000 at any time from a local bank, with interest not due until the following month.

Required:

Prepare the company's cash budget for March in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.

Answer 1

Zoo Inc.
Cash budget
For the month of March
Opening balance	$    20,000
Add: Cash receipts	$ 116,000
Total cash available	$ 136,000
Less: Cash disbursments	$    87,000
Excess of cash available over disbursments	$    49,000
Financing
Borrowings ($60,000-$49,000)	$    11,000
Repayments
Total Financing	$    11,000
Ending cash balance	$    60,000

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