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 Total cash receipts Total cash disbursements 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter $ 360,000 $ 480,000 410,000 430,000 $ 400,000 3 370,000 360,000 380,000 The company's beginning cash balance for the upcoming fiscal year will be $18,000. 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 $ 18,00010,000 Beginning cash balance Total cash receipts Total cash available Total cash disbursements Excess of cash available over disbursements Financing. 18,000 10,000 18,000 10,000 Borrowings Repayments Interest Total financing Ending cash balance $ 18,000$ 10,000$

Explanation / Answer

Garden Depot Cash Budget Particular Ist Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Beginning Cash Balance $18,000 $10,000 $86,080 $136,080 $18,000 Add: Cash Collection $360,000 $480,000 $410,000 $430,000 $1,680,000 Total Cash Available (a) $378,000 $490,000 $496,080 $566,080 Cash Disbursement $400,000 $370,000 $360,000 $380,000 $1,510,000 Total Cash Disbursement (b) $400,000 $370,000 $360,000 $380,000 Excess ( Deficiency) of Cash (a-b) -$22,000 $120,000 $136,080 $186,080 $188,000 Financing Borrowing -Loan $32,000 Repayment -Loan -$32,000 -$1,920 Interest on Note Payable -$1,920 Ending Cash Balance $10,000 $86,080 $136,080 $186,080 $186,080

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