Sea Salt Manufacturing Company's policy is to maintain a safe minimum end of the month cash balance of $54,000. Its May cash budget information is as follows: Beginning cash balance, $60,000; cash receipts, $31,000; and cash disbursements, $42,000. The budgeted financing amount the company would have to borrow from the bank in May is

Question

Quizplus · Accepted Answer

Required Borrowings = Minimum Cash Balance Required F1F1F1S1?F1F1F10 (Beginning Cash Balance + Cash Receipts F1F1F1S1?F1F1F10 Cash Disbursements)
Bank's Borrowing in May = $54,000 F1F1F1S1?F1F1F10 $60,000 F1F1F1S1?F1F1F10 $31,000 + $42,000 = $5,000.

Sea Salt Manufacturing Company's Policy Is to Maintain a Safe