Jaborosa, Inc., a merchandising company, has provided the following budgeted amounts for the next budget period. $$\begin{array} { | l | r | }
\hline \text { Beginning cash balance } & \$ 30,200 \
\hline \text { Cash collections } & 682,000 \
\hline \text { Payments for: } & \
\hline \text { Purchases of merchandise inventory } &350,000 \
\hline \text { Selling and administrative expenses } &70,200\
\hline \text { Capital expenditures } & 88,500 \
\hline
\end{array}$$ A minimum cash balance of $250,000 is required to be maintained. The company can borrow in increments of $10,000 as and when required. Assume the company can borrow the needed funds at the end of the period. Calculate the ending cash balance for the budget period.

Question

Jaborosa, Inc., a merchandising company, has provided the following budgeted amounts for the next budget period. $$\begin{array} { | l | r | } 
\hline \text { Beginning cash balance } & \$ 30,200 \
\hline \text { Cash collections } & 682,000 \
\hline \text { Payments for: } &  \
\hline \text { Purchases of merchandise inventory } &350,000  \
\hline \text { Selling and administrative expenses } &70,200\
\hline \text { Capital expenditures } & 88,500 \
\hline
\end{array}$$ A minimum cash balance of $250,000 is required to be maintained. The company can borrow in increments of $10,000 as and when required. Assume the company can borrow the needed funds at the end of the period. Calculate the ending cash balance for the budget period.

Quizplus · Accepted Answer

The ending cash balance is calculated as follows: Beginning cash balance + Cash collections - Payments for purchases, selling, and administrative expenses, and capital expenditures = $30,200 + $682,000 - ($350,000 + $70,200 + $88,500) = $203,500. Since a minimum cash balance of $250,000 is required, the company must borrow $46,500 (rounded to the nearest increment of $10,000, which is $50,000) to meet this requirement. Therefore, the ending cash balance after borrowing is $203,500 + $50,000 = $253,500.

Jaborosa, Inc A Minimum Cash Balance of $250,000 Is Required to Be