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23 September, 22:19

Ari, Inc. is working on its cash budget for December. The budgeted beginning cash balance is $23,000. Budgeted cash receipts total $136,000 and budgeted cash disbursements total $135,000. The desired ending cash balance is $58,000. To attain its desired ending cash balance for December, the company needs to borrow:

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  1. 23 September, 22:34
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    The business will need to borrow $34,000

    Explanation:

    We will need to analyse the cash flows the business has in order to determine how much needs to be borrowed to meet the ending cash balance desired.

    The opening cash balance is $23,000, cash inflow as receipts is $136,000

    So total cash on hand will be 23,000 + 136,000 = $159,000

    The cash on hand less disbursements will give ending balance

    Ending balance = 159,000 - 135,000

    Ending balance = $24,000

    Desired closing balance is $58,000

    Balance to meet desired cash = 58,000 - 24,000

    Balance to meet desired cash = $34,000
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