10.00 points A cash budget, by quarters, is given below for a retail company (00

Question

10.00 points A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. Fill in the missing amounts (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.) Quarter (000 9 S s S Cash balance, beginning Add collections from customers Total cash available Less disbursements: 78 76 81 30 Purchase of inventory Selling and administrative expenses Equipment purchases 30 30 121 10 10 91 Total disbursements Excess (deficiency) of cash available over disbursements Repayments (including interest) Total financing Cash balance, ending Interest will total $1,000 for the year s S 5 S References eBook &Resources; Difficulity: 1 Easy

Explanation / Answer

1.

For arriving at Collections from Customers, Selling and administrative expenses and equipment purchases for quarter 4, subtract the first three quarters' expenses from the total

2.

Workings:

Building and Equipment, Net of depreciation

Opening balance 204,000

+Purchases           11,100

- Depreciation          2,850

Ending balance     121,250

b. Accounts Receivable = Credit sales * 50%

c. Accounts Payable = 140,000*60%

d. Retained Earnings = 64,250+15,600 (Opening balance + Net profit for the month)

Cash Budget Quarter Year 1 2 3 4 Cash Balance, beginning 9 5 5 5 9 Add: Collections from customers 78 76 99 95 348 Total Cash Available 87 81 104 100 357 Less: Disbursements Purchase of inventory 38 48 46 30 162 Selling and administrative expenses 39 30 30 22 121 Equipment purchases 10 10 13 10 43 Divdends 2 2 2 2 8 Total disbursements 89 90 91 64 334 Excess / (Defeciency) of cash available over disbursements -2 -9 13 36 23 Financings Borrowings 7 14 21 Repayments (Including Interest) -8 -14 -22 Cash Balance endings 5 5 5 22 22

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