GrowMaster Products, a rapidly growing distributor of home gardening equipment,
ID: 2475131 • Letter: G
Question
GrowMaster Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm’s marketing director, has completed the following sales forecast.
Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information.
GrowMaster maintains a minimum cash balance of $50,000. If the cash balance is less than $50,000 at the end of the month, the company borrows against its 12 percent line of credit in order to maintain the balance. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in increments of $1,000). Accrued interest is paid in full with each principal repayment. The projected cash balance on April 1 is $55,400.
repare the cash budget for the second quarter. (Round answers to 0 decimal places, e.g. 5,275. Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.)
Cash Budget
April
May
June
Quarter
Beginning Cash balance
$
$
$
$
Wages Utilities Salaries Advertising Property taxes Income taxes Payments for inventory Interest Insurance Borrowings Repayments Collection from Sales
Total financing Cash excess (needed) disbursements Total cash disbursements Cash excess (deficiency) Total cash available to spend Minimum cash balance
Add: Less:
Total cash disbursements Total financing Cash excess (deficiency) Cash excess (needed) Minimum cash balance disbursements Total cash available to spend
Repayments Insurance Income taxes Interest Borrowings Collection from Sales Payments for inventory Wages Salaries Advertising Utilities Property taxes
Insurance Borrowings Utilities Income taxes Salaries Interest Collection from Sales Repayments Payments for inventory Wages Advertising Property taxes
Wages Collection from Sales Payments for inventory Advertising Insurance Salaries Borrowings Property taxes Utilities Income taxes Repayments Interest
Borrowings Property taxes Salaries Insurance Utilities Advertising Income taxes Repayments Interest Collection from Sales Payments for inventory Wages
Borrowings Property taxes Utilities Repayments Insurance Income taxes Interest Collection from Sales Payments for inventory Wages Salaries Advertising
Collection from Sales Wages Repayments Insurance Salaries Interest Property taxes Advertising Income taxes Utilities Payments for inventory Borrowings
Salaries Repayments Income taxes Collection from Sales Interest Payments for inventory Property taxes Advertising Insurance Utilities Borrowings Wages
Repayments Income taxes Wages Insurance Interest Advertising Salaries Utilities Property taxes Borrowings Collection from Sales Payments for inventory
Total cash disbursements Cash excess (needed) disbursements Total cash available to spend Cash excess (deficiency) Minimum cash balance Total financing
Total financing Minimum cash balance Cash excess (needed) Total cash available to spend Total cash disbursements disbursements Cash excess (deficiency)
Minimum cash balance Total financing disbursements Total cash disbursements Cash excess (deficiency) Cash excess (needed) Total cash available to spend
Cash excess (needed) Minimum cash balance Cash excess (deficiency) Total financing disbursements Total cash available to spend Total cash disbursements
Financing:
Collection from Sales Wages Salaries Income taxes Payments for inventory Property taxes Advertising Borrowings Insurance Utilities Repayments Interest
Insurance Wages Utilities Income taxes Borrowings Collection from Sales Property taxes Repayments Interest Advertising Payments for inventory Salaries
Salaries Utilities Payments for inventory Income taxes Insurance Borrowings Interest Repayments Collection from Sales Wages Advertising Property taxes
Minimum cash balance Cash excess (needed) disbursements Total financing Cash excess (deficiency) Total cash available to spend Total cash disbursements
Ending Cash Balance
$
$
$
$
Month Sales Month Sales January $908,300 July $1,508,600 February $1,005,000 August $1,508,600 March $908,300 September $1,609,200 April $1,158,100 October $1,609,200 May $1,256,000 November $1,508,600 June $1,403,400 December $1,702,100Explanation / Answer
Workings
April May June Beginning Cash balance 55,400 50753 50225 Collections 946980 1058180 1216840 Total cash available 10,02,380 11,08,933 12,67,065 Disbursements Accounts payable 476305.0 530417.0 579030.0 Wages 347430 376800 421020 Salaries and fringe benefits 27475 27475 27475 Advertising 31050 31050 31050 Insurance 16133 16133 16133 Utilities 14833 14833 14833 Property taxes 0 0 35400 Income tax 130400 0 0 Total disbursements 1043627 996709 1124942 Cash balance -41247 112225 142123 Cash borrowed 92000 0 repayments 62000 31220 Ending balance 50753 50225 110903Related Questions
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