Pixi Boutique will have cash receipts of $57,000 in December and cash disbursements of $51,000 for this month. If its beginning cash is $12,000 and its desired reserve is $9,000, what will its excess be for December?

A. There is no excess but a shortfall.
B. $6,000
C. $9,000
D. $18,000

The excess cash balance is the ending cash balance for the month less the desired reserve. If the desired reserve is more than the ending balance, there is a shortfall.

The ending cash balance for a month can be calculated as follows,

Ending cash balance = Opening cash balance + Receipts - Disbursements

Ending Cash balance = 12000 + 57000 - 51000 = $18000

The excess cash balance is = 18000 - 9000 = $9000

abiolataiwo2015 abiolataiwo2015 · Answer 2 · 2021-11-19T12:08:30+01:00

Based on the information its excess for December is $9,000.

First step is to calculate the cash balance using this formula

Cash balance=Beginning balance+ Cash receipts- Cash disbursement

Where:

Beginning balance=$12,000

Cash receipts=$57,000

Cash disbursement=$51,000

Let plug in the formula

Cash balance=$12,000+$57,000-$51,000

Cash balance=$18,000

Second step is to calculate the excess cash

Excess cash=Cash balance- Desired reserve

Excess cash=$18,000-$9,000

Excess cash=$9,000

Inconclusion its excess for December is $9,000.

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