Question

Required information The following information applies to the questions displayed below.] The following trial balance was drawn from the records of Perez Company as of October 1, 2018 21,500 71,000 45,500 310,000 Cash Accounts receivable Inventory Store equipment Accumulated depreciatiorn Accounts payable Line of credit loan Common stock Retained earnings Totals $ 79,000 77,500 210,000 61,000 20,500 $448,000 $448,000 c. Indicate whether Perez will need to borrow money during October by preparing October's Cash Budget. ash Budget for October Cash available Less: Payments Total budgeted payments Cash surplus (shortage) Will Havel need to borrow money during October?

Answer 1

Note: Due to no clear information, I have to make some assumptions. They are:-

1. Accounts payable and receivable will be settled in October.

2. No cash sales occur in October.

3. Line of credit is not repaid in October, as question asks whether further money is to be borrowed.

Cash Budget for October:-

Cash in hand: 21500

Add: Accounts receivable-71000

Cash available:- 92500

Less: Payments

Accounts Payable- 77500

Total Budgeted payments :- 77500

Cash Surplus (shortage) - Cash Available Less budgeted payments

=92500 - 77500 = 15000 Surplus

There will be no need to borrow money during October.