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24 December, 09:27

Webster Corporation is preparing its cash budget for April. The March 31 cash balance is $36,400. Cash receipts are expected to be $641,000 and cash payments for purchases are expected to be $608,500. Other cash expenses expected are $27,000 selling and $33,500 general and administrative. The company desires a minimum cash balance at the end of each month of $30,000. If necessary, the company borrows enough cash to meet the minimum using a short-term note. The amount Webster must borrow during April is:

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  1. 24 December, 09:43
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    Amount to be borrowed = $21,600

    Explanation:

    Provided details,

    Opening cash balance as on 31 March = $36,400

    Add: Expected Receipts = $641,000

    Less: Expected purchases = ($608,500)

    Less: Cash Expenses = ($27,000)

    Less: Selling and administration ($33,500)

    Total balance = $8,400

    Balance to be maintained = $30,000

    Loan to be taken or amount to be borrowed = $30,000 - $8,400 = $21,600
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