Francis Manufacturing Company is currently preparing its cash budget for next mo

Question

Francis Manufacturing Company is currently preparing its cash budget for next month and has gathered the following information:

Expected cash receipts $39400

Expected disbursements:

Direct Materials $12000

Direct Labor $9000

Manufacturing overhead $11500

Selling & Admin expenses $22000

The beginning cash balance will be $5,000 and the company requires a minimum cash balance at the end of the month of $5,000) How much will Francis Manufacturing need to borrow to meet its cash needs for the month?

Answers:

A. None of these

B. $9,100

C. $14,100

D. $15,100

Explanation / Answer

Ending cash balance=Beginning cash balance+ Expected cash receipts- Expected disbursements

=$5000+39400-(12000+9000+11500+22000)

=-10100

Required balance is 5000.

5000=-10100+x

x=5000+10100=$15100

Correct option is D.

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