Guthridge Inc. is working on its cash budget for February. The budgeted beginning cash balance is $26,000. Budgeted cash receipts total $104,000 and budgeted cash disbursements total $100,000. The desired ending cash balance is $40,000. To attain its desired ending cash balance for February, the company needs to borrow:

Question

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To attain the desired ending cash balance of $40,000, the company needs to have a total of $66,000 ($26,000 beginning balance + $104,000 receipts - $100,000 disbursements - $40,000 ending balance). Since the company already has $26,000, it only needs to borrow the difference, which is $10,000 (Choice B).