The following information is available for Pharoah Company for the month of January: Expected cash receipts $59,400; expected cash disbursements $66,090; and cash balance on January 1, $12,230. Management wishes to maintain a minimum cash balance of $7,570. Prepare a basic cash budget for the month of January.

See cash budget below

Explanation:

A cash budget shows the expected future cash receipts and payment for a forthcoming accounting period and the cash balance.

It is prepared as follows:

Cash budget

$

Expected cash receipts 59,400

Expected cash payment 66,090

Cash deficit (6690)

Opening cash balance 12,230

Borrowed fund 2,030

Closing cash balance 7,570

Note:

The borrowed is the difference between the net cash balance and the the minimum cash balance

Net cash balance = 12,030 - 6,690 = 5340

Borrowed fund = 7,570-5340 = 2,030

Borrowed fund = $2,030