Bries Corporation is preparing its cash budget for January. The budgeted beginning cash balance is $18,400. Budgeted cash receipts total $185,000 and budgeted cash disbursements total $188,800. The desired ending cash balance is $30,400.To attain its desired ending cash balance for January, the company should borrow:

Question

Quizplus · Accepted Answer

To calculate how much the company should borrow, we need to compute the total cash shortfall, which is the difference between total cash receipts and total cash disbursements:

Total cash receipts - Total cash disbursements = $185,000 - $188,800 = -$3,800

This negative number means that the company is short of cash and needs to borrow to cover its expenses and attain its desired ending cash balance of $30,400.

The amount to borrow is thus:

Desired ending cash balance - (Beginning cash balance + Total cash receipts - Total cash disbursements) 
= $30,400 - ($18,400 + $185,000 - $188,800) 
= $15,800

Therefore, the company should borrow $15,800 to meet its cash needs for January.

Bries Corporation Is Preparing Its Cash Budget for January