Garden Depot is a retailer that is preparing its budget for the upcoming fiscal
ID: 2341320 • Letter: G
Question
Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:
The company’s beginning cash balance for the upcoming fiscal year will be $20,000. The company requires a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded.
Required:
Complete the company's cash budget for the upcoming fiscal year. (Cash deficiency, repayments, and interest, should be indicated by a minus sign.)
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total cash receipts $350,000 $470,000 $400,000 $420,000 Total cash disbursements $393,000 $363,000 $353,000 $373,000Explanation / Answer
Garden Depot Cash Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Beginning cash balance 20000 10000 83010 130010 20000 Total cash receipts 350000 470000 400000 420000 1640000 Total cash available 370000 480000 483010 550010 1660000 Less total cash disbursements 393000 363000 353000 373000 1482000 Excess (deficiency) of cash available over disbursements -23000 117000 130010 177010 178000 Financing: Borrowings 33000 0 0 0 33000 Repayments 0 -33000 0 0 -33000 Interest 0 -990 0 0 -990 Total financing 33000 -33990 0 0 Ending cash balance 10000 83010 130010 177010 177010
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