Ari, Inc. is working on its cash budget for December. The budgeted beginning cash balance is $14,000. Budgeted cash receipts total $127,000 and budgeted cash disbursements total $126,000. The desired ending cash balance is $40,000. Any borrowing is in multiples of $1,000 and interest is paid in the month following the borrowing.
To attain its desired ending cash balance for December, the company needs to borrow:

Question

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To achieve a desired ending cash balance of $40,000, Ari, Inc. needs to ensure that the ending cash balance after receipts and disbursements meets this target. Starting with $14,000, adding $127,000 in receipts, and subtracting $126,000 in disbursements leaves $15,000. To reach $40,000, they need to borrow $25,000.

Ari, Inc Is Working on Its Cash Budget for December