Question

Zhang Industries is preparing a cash budget for June. The company has $25,000 cash at the beginning of June and anticipates $95,000 in cash receipts and $111,290 in cash disbursements during June. The company has no loans outstanding on June 1. Compute the amount the company must borrow, if any, to maintain a $20,000 cash balance.

Answer 1

Answer:

Total borrow is $11,290.

Explanation:

• Needs of cash are equal to cash at the end plus disbursements minus cash at the beggining minus receipts.
• Cash at the end 20,000
• Disbursementes 111,290
• Cash at the beginning 25,000
• Receipts 95,000
• So the equation is:
• $20,000 + 111,290 -25,000 - 95,000 = 11,290$

The explanation is if you have 25,000 at moment 0, you win 95,000 and you expent 111,290, you will need 11,290 more in order to have 20,000 at moment 1.