Western Company is preparing a cash budget for June. The company has $12,000 cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during June. Western Company has an agreement with its bank to maintain a minimum cash balance of $10,000. As of May 31, the company owes $15,000 to the bank. To maintain the $10,000 required balance, during June the company must:

Question

Quizplus · Accepted Answer

The company starts with $12,000 and expects a net cash flow of $30,000 - $34,500 = -$4,500, leaving $7,500. To maintain the $10,000 minimum, they need to borrow $2,500.

Western Company Is Preparing a Cash Budget for June