Roman company is preparing its cash budget for the upcoming month. the budgeted beginning cash balance is expected to be $ 44 comma 000. budgeted cash receipts are $ 108 comma 000, while budgeted cash disbursements are $ 120 comma 000. roman company wants to have an ending cash balance of $ 49 comma 000. how much would roman company need to borrow to achieve its desired ending cash balance?

Roman Company has to borrow $17,000 in order to achieve its desired ending balance.

We arrive at the answer as follows:

Opening Cash Balance $44,000

Add: Cash Recepits $108,000

$152,000

Less: Cash disbursements $120,000

Cash Balance at month end $32,000

Desired Cash Balance at month end $49,000

Since cash balance at month end is lower than the desired cash balance, Roman has to borrow an amount equal to the difference between the two balances to achieve its desired cash balance.

Borrowings = Desired Cash Balance - actual cash balance

Borrowings = $17,000 ($49,000- $32,000)

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