Bookworm Publishers publishes books and they have gathered the following data for the month of October: Data Cash on 8/1 $7,000 Expected Cash Collections $350,000 Direct Materials Cash Disbursements $62,000 Direct Labor Cash Disbursements $45,000 MOH Cash Disbursements $43,000 Operating Expenses Cash Disbursements $85,000 Capital Expenditures Cash Disbursements $125,000 Bookworm Publishers requires an ending cash balance of at least $5,000 and can borrow from a line of credit in $1,000 increments. What is the excess or deficiency of cash for October?

Question

Business

Aleena Cisneros

5 December, 08:45

Bookworm Publishers publishes books and they have gathered the following data for the month of October: Data Cash on 8/1 $7,000 Expected Cash Collections $350,000 Direct Materials Cash Disbursements $62,000 Direct Labor Cash Disbursements $45,000 MOH Cash Disbursements $43,000 Operating Expenses Cash Disbursements $85,000 Capital Expenditures Cash Disbursements $125,000 Bookworm Publishers requires an ending cash balance of at least $5,000 and can borrow from a line of credit in $1,000 increments. What is the excess or deficiency of cash for October?

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Payten Arias · Answer 1

Deficiency of cash for the month of October = $7,000

Explanation:

Opening cash = $7,000

Add: Expected cash collections = $350,000

Total cash in hand expected = $357,000

Less: Cash disbursements

Direct Material = $62,000

Direct Labor = $45,000

MOH Disbursements = $43,000

Operating Expense = $85,000

Capital Expense = $125,000

Total cash disbursements = $360,000

Net balance expected = $357,000 - $360,000 = $3,000 deficit.

Also provided month end balance should be $5,000

Therefore total deficit = $3,000 + $5,000 = $8,000

Now provided $1,000 cash can be borrowed in that case net deficit = $8,000 - $1,000 = $7,000