Roman Company is preparing its cash budget for the upcoming month. The budgeted beginning cash balance is expected to be $37,000. Budgeted cash receipts are $101,000, while budgeted cash disbursements are $129,000. Roman Company wants to have an ending cash balance of $40,000. How much would Roman Company need to borrow to achieve its desired ending cash balance?

Question

Quizplus · Accepted Answer

To determine how much Roman Company needs to borrow to achieve its desired ending cash balance, the following formula can be used:

Ending Cash Balance = Beginning Cash Balance + Cash Receipts - Cash Disbursements +/- Other Adjustments

Plugging in the numbers provided in the problem, we can solve for Other Adjustments:

$40,000 = $37,000 + $101,000 - $129,000 + Other Adjustments
Other Adjustments = $31,000

Since the problem does not provide any other information or sources of cash, it can be assumed that the company needs to borrow $31,000 to achieve its desired ending cash balance of $40,000. Therefore, the best choice is B.

Roman Company Is Preparing Its Cash Budget for the Upcoming