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23 October, 23:42

The following information is available for Pharoah Company for the month of January: Expected cash receipts $59,400; expected cash disbursements $66,090; and cash balance on January 1, $12,230. Management wishes to maintain a minimum cash balance of $7,570. Prepare a basic cash budget for the month of January.

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  1. 23 October, 23:49
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    See cash budget below

    Explanation:

    A cash budget shows the expected future cash receipts and payment for a forthcoming accounting period and the cash balance.

    It is prepared as follows:

    Cash budget

    $

    Expected cash receipts 59,400

    Expected cash payment 66,090

    Cash deficit (6690)

    Opening cash balance 12,230

    Borrowed fund 2,030

    Closing cash balance 7,570

    Note:

    The borrowed is the difference between the net cash balance and the the minimum cash balance

    Net cash balance = 12,030 - 6,690 = 5340

    Borrowed fund = 7,570-5340 = 2,030

    Borrowed fund = $2,030
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