TB MC Qu. 13-79 (Algo) Ari, Inc. is working on its cash budget.. Ari, Inc. Is working on its cash budget for December. The budgeted beginning cash balance is $27,000. Budgeted cash receipts total $140,000 and budgeted cash disbursements total $139,000. The desired ending cash balance is $66,000. To attain its desired ending cash balance for December, the company needs to borrow: Any borrowing is in multiples of $1,000 and interest is paid in the month following the borrowing. To attain its desired ending cash balance for December, the company needs to borrow:
TB MC Qu. 13-79 (Algo) Ari, Inc. is working on its cash budget.. Ari, Inc. Is working on its cash budget for December. The budgeted beginning cash balance is $27,000. Budgeted cash receipts total $140,000 and budgeted cash disbursements total $139,000. The desired ending cash balance is $66,000. To attain its desired ending cash balance for December, the company needs to borrow: Any borrowing is in multiples of $1,000 and interest is paid in the month following the borrowing. To attain its desired ending cash balance for December, the company needs to borrow:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**Title: Cash Budget Planning for December**
**Introduction:**
Ari, Inc. is preparing its cash budget for December. The company’s financial planning involves ensuring that cash flows adequately cover expenses while maintaining desired cash reserves.
**Budget Details:**
- **Beginning Cash Balance:** $27,000
- **Budgeted Cash Receipts:** $140,000
- **Budgeted Cash Disbursements:** $139,000
- **Desired Ending Cash Balance:** $66,000
**Borrowing Policy:**
- The company must borrow funds to achieve the desired ending cash balance of $66,000.
- Borrowing must occur in multiples of $1,000.
- Interest on borrowed funds is payable during the month following the borrowing.
**Decision Point:**
To reach the targeted ending cash balance for December, the following borrowing options are considered:
- **Option 1:** Borrow $66,000
- **Option 2:** Borrow $0
The task requires selecting the appropriate borrowing amount to meet financial goals effectively.
**Conclusion:**
Strategic financial management through proper cash budgeting and borrowing ensures that Ari, Inc. maintains liquidity and financial stability during December.
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