Bustillo Inc. is working on its cash budget for March. The budgeted. 3 Bustillo Inc. ts working on ts cash budget for March. The budgeted beginning cash balance is $40,000. Budgeted cash receipts total $121,000 and budgeted cash disbursements total $115,000. The desired ending cash balance Is $61,500 To attain its desired ending cash balance for March, the company needs to borrow.

a. $107,500

b. $15,500

c. $0

The firm needs to borrow $15500 to attain the desired ending balance for cash. So, option b is the correct answer.

Explanation:

The desired cash balance is the cash balance at the end of the period that is required by a firm. The amount in excess or deficit of the desired balance can be calculated by calculating the end cash balance and subtracting the desired cash balance from it.

The ending cash balance for the period can be calculated as follows,

Ending cash balance = Opening balance + Receipts - Disbursements

Ending cash balance = 40000 + 121000 - 115000 = $46000

The excess/deficit is = 46000 - 61500 = - $15500 or deficit of $15500

Thus, the firm needs to borrow $15500 to attain the desired ending balance for cash.