Pixi Boutique will have cash receipts of $57,000 in December and cash disbursements of $51,000 for this month. If its beginning cash is $12,000 and its desired reserve is $9,000, what will its excess be for December?

A. There is no excess but a shortfall.

B. $6,000

C. $9,000

D. $18,000

The excess cash balance is $9000 and option C is the correct answer.

Explanation:

The excess cash balance is the ending cash balance for the month less the desired reserve. If the desired reserve is more than the ending balance, there is a shortfall.

The ending cash balance for a month can be calculated as follows,

Ending cash balance = Opening cash balance + Receipts - Disbursements

Ending Cash balance = 12000 + 57000 - 51000 = $18000

The excess cash balance is = 18000 - 9000 = $9000