For August,Bletchley Blinds will have cash receipts of $97,000 and cash disbursements of $108,000.If its beginning cash is $5,000 and its desired reserve is $2,000,what will be its shortfall in cash for the month?

Question

Quizplus · Accepted Answer

To find the shortfall in cash, we need to calculate the ending cash balance first. 
Beginning cash balance = $5,000 
Cash receipts = $97,000 
Total cash available = $102,000 
Cash disbursements = $108,000 
Ending cash balance before reserve = -$6,000 (cash disbursements exceed cash available) 
Desired reserve = $2,000 
Ending cash balance after reserve = -$8,000 
Shortfall in cash = Ending cash balance after reserve - Beginning cash balance = -$8,000 - $5,000 = -$3,000 
Therefore, the answer is C, which represents a shortfall of $8,000.

For August,Bletchley Blinds Will Have Cash Receipts of $97,000 and Cash