Garden Depot is a retailer that is preparing its budget for the upcoming fiscal
ID: 2452356 • 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 $42,000. 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.
Complete the company's cash budget for the upcoming fiscal year. (Cash deficiency, repayments, and interest, should be indicated by a minus sign.)
Total cash receipts $290,000 $440,000 $320,000 $340,000 Total cash disbursements $337,000 $307,000 $297,000 $317,000Explanation / Answer
Cash Budget Quarter I II III IV A Opening 42,000 10,000.00 127,100 150,100 B Receipts 290,000 440,000 320,000 340,000 C Total Cash Available 332,000 450,000 447,100 490,100 D Less Disbursments 337,000 307,000 297,000 317,000 E Excess or deficiency Available (5,000) 143,000 150,100 173,100 F Interest G Financing: Borrowings (at beginnings of quarters) 15,000 - - - Repayments (at ends of quarters) - (15,000) - - Interest - (900) - - Total financing (15,000) (15,900) - - H Cash balance, ending 10,000 127,100 150,100 173,100
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