Bright Path Pharmacy has budgeted the following cash flows for January: Cash Receipts: $125,000 For inventory purchases: $105,000 For selling & administrative (S&A) expenses: $40,000 For interest expense: $1,000 Bright Path Pharmacy had a cash balance of $15,000 on January 1. The company desires to maintain a cash cushion of $10,000. Funds are assumed to be borrowed and repaid on the last day of each month. How much does the company need to borrow at the end of January to maintain its cash cushion?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter7: Budgeting
Section: Chapter Questions
Problem 13EA: What is the amount of budgeted cash payments if purchases are budgeted for $420,000 and the...
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Bright Path Pharmacy has budgeted the following cash flows for
January:
Cash Receipts: $125,000
For inventory purchases: $105,000
For selling & administrative (S&A) expenses: $40,000
For interest expense: $1,000
Bright Path Pharmacy had a cash balance of $15,000 on January 1.
The company desires to maintain a cash cushion of $10,000. Funds
are assumed to be borrowed and repaid on the last day of each
month.
How much does the company need to borrow at the end of January
to maintain its cash cushion?
Transcribed Image Text:Bright Path Pharmacy has budgeted the following cash flows for January: Cash Receipts: $125,000 For inventory purchases: $105,000 For selling & administrative (S&A) expenses: $40,000 For interest expense: $1,000 Bright Path Pharmacy had a cash balance of $15,000 on January 1. The company desires to maintain a cash cushion of $10,000. Funds are assumed to be borrowed and repaid on the last day of each month. How much does the company need to borrow at the end of January to maintain its cash cushion?
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