Garden Depot is a retailer that is preparing its budget for the upcoming fiscal

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 1st Quarter 2nd Quarter rd Quarter 4th Quarter Total cash receipts Total cash disbursements 2 80,000 400,000 330,000 350,000 344,000 314,000 304,000 324,000 The company's beginning cash balance for the upcoming fiscal year will be $45,000. 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 Prepare the company's cash budget for the upcoming fiscal year. (Repayments, and interest, should be indicated by a minus sign.) Garden Depot Cash Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Beginning cash balance Total cash receipts Total cash available Total cash disbursements Excess of cash available over disbursements Financing Borrowings Repayments Interest Total financing Ending cash balance

Explanation / Answer

Q1 Q2 Q3 Q4 Year Cash budget: Cash Balance Beginning 45000 10000 65260 61260 45000 Cash collection from customer 280000 400000 300000 350000 1330000 Total Available cash 325000 410000 365260 411260 1375000 Total disbursement 344000 314000 304000 324000 1286000 Excess (Deficiency) -19000 96000 61260 87260 89000 Financing: Borrowings 29000 0 0 29000 Repayments -29000 0 0 -29000 Interest -1740 0 0 -1740 Total financing 29000 -30740 0 0 -1740 Cash Balance, ending 10000 65260 61260 87260 87260

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