Crose Inc. is working on its cash budget for November. The budgeted beginning cash balance is $22,000. Budgeted cash receipts total $118,000 and budgeted cash disbursements total $116,000. The desired ending cash balance is $40,000.
-To attain its desired ending cash balance for November, the company needs to borrow:

Question

Quizplus · Accepted Answer

To calculate the amount of borrowing required, we need to use the formula:
Beginning Cash Balance + Cash Receipts - Cash Disbursements = Ending Cash Balance
Plugging in the given values, we get:
$22,000 + $118,000 - $116,000 = $24,000
This is the ending cash balance without any borrowing. However, the desired ending cash balance is $40,000. So we need to borrow the difference between the two, which is:
$40,000 - $24,000 = $16,000
Therefore, the company needs to borrow $16,000 to attain its desired ending cash balance for November, which is option A.

Crose Inc Is Working on Its Cash Budget for November