Brockman Company is preparing its cash budget for the upcoming month. The budgeted beginning cash balance is expected to be $35,000. Budgeted cash disbursements are $127,000, while budgeted cash receipts are $126,000. Brockman Company wants to have an ending cash balance of $50,000. How much would Brockman Company need to borrow to achieve its desired ending cash balance?

Question

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The company needs to borrow $16,000. Starting with a cash balance of $35,000, adding receipts of $126,000, and subtracting disbursements of $127,000 results in a cash balance of $34,000. To reach the desired ending balance of $50,000, the company must borrow $16,000 ($50,000 - $34,000).

Brockman Company Is Preparing Its Cash Budget for the Upcoming