Zoo Inc. is preparing its cash budget for March. The budgeted beginning cash balance is $27,000. Budgeted cash receipts total $106,000 and budgeted cash disbursements total $93,000. The desired ending cash balance is $65,000. The company can borrow up to $70,000 at any time from a local bank, with interest not due until the following month. Required: Prepare the company's cash budget for March in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.

                                                     Zoo Inc.

                              Cash budget for the month of March

                                                                    Amount in $

Beginning cash balance                                  27,000                

Add:

Cash receipts                                                 106,000

Total cash available                                       133,000

Less:

Cash disbursements                                      (93,000)

Ending cash balance before borrowing         40,000

Desired ending cash balance                         65,000

Cash excess (deficiency)                                (25,000)

The borrowing required to attain desired ending cash balance  is $25,000

Explanation:

Cash budget is a forecast of the net cash flows to/from an entity over a given period of time.

Details of the cash budget include the opening cash balance, the expected expenses or outflows of cash, the expected inflows and the closing balance expected as a result of the three (3) items mentioned earlier.

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