Wehr Inc is preparing its cash budget for April The budgeted beginning cash bala

ID: 2485020 • Letter: W

Question

Wehr Inc is preparing its cash budget for April The budgeted beginning cash balance is $19,000. Budgeted cash receipts total $105,000 and budgeted cash disbursements total $98,000. The desired ending cash balance is $50,000. The company can borrow up to $120,000 at any time from a local bank with interest not clue until the following month. Prepare the company's cash budget for April in good form. Make sure to indicate what borrowing if any would be needed to attain the desired ending cash balance.

Explanation / Answer

Wehr Inc’s cash budget for the month of April:

Particulars

Amount ($)

Opening budgeted cash

19000

(+) Budgeted cash receipt

105000

(-) Budgeted cash disbursement

(98000)

Balance before ending desire cash

26000

(+) Borrowing for desire ending balance*

24000

Desire ending cash balance

50000

*company’s desire ending cash balance is $50000.However, the company is generating only $26000 cash from it’s activities.so, for the shortfall, company will borrow the money from it’s local bank which is $24000 (50000-26000) in this case.