Garden Depot is a retailer that is preparing its budget for the upcoming fiscal
ID: 2477496 • 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: 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 $373,000 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.)
Explanation / Answer
2,45,980
Interest = 33,000*3%*2Qrtr = 1,980
Quarter 1 2 3 4 Cash Balance, Beginning 20,000 10,000 1,51,980 1,98,980 Add: Cash Receipts 3,50,000 4,70,000 4,00,000 4,20,000 Total Cash Available 3,70,000 4,80,000 5,51,980 6,18,980 Less: Disbursment -3,93,000 -3,63,000 -3,53,000 -3,73,000 Excess (Deficiency) of cash available over disbursments -23,000 1,17,000 1,98,980 2,45,980 Financing Borrowings (beg) 33,000 - - Repayments (Including Interest)* 34,980 - - Total Financing 33,000 34,980 - - Cash Balance, Ending 10,000 1,51,980 1,98,9802,45,980
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