Garden Depot is a retailer that is preparing its budget for the upcoming fiscal
ID: 2515220 • 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 $27,000. 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.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total cash receipts $320,000 $440,000 $370,000 $390,000 Total cash disbursements $372,000 $342,000 $332,000 $352,000Required Complete the company's cash budget for the upcoming fiscal year. (Cash deficiency, repayments, and interest, should be indicated by a minus sign.) Garden Depot Cash Budget 1st Quarter 2nd Quarter 3rd Quarter 4th QuarterYear Beginning cash balance Total cash receipts Total cash available Less total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayments Interest Total financing Ending cash balance
Explanation / Answer
Answer
Q1
Q2
Q3
Q4
Year
Beginning Cash Balance
$ 27,000.00
$ 10,000.00
$ 70,900.00
$ 1,08,900.00
$ 27,000.00
Total Cash receipt
$ 3,20,000.00
$ 4,40,000.00
$ 3,70,000.00
$ 3,90,000.00
$ 15,20,000.00
Total cash available
$ 3,47,000.00
$ 4,50,000.00
$ 4,40,900.00
$ 4,98,900.00
$ 15,47,000.00
Less: Total cash disbursement
$ 3,72,000.00
$ 3,42,000.00
$ 3,32,000.00
$ 3,52,000.00
$ 13,98,000.00
Excess (deficiency) of cash available over disbursements
$ (25,000.00)
$ 1,08,000.00
$ 1,08,900.00
$ 1,46,900.00
$ 1,49,000.00
Financing:
Borrowings
$ 35,000.00
$ 35,000.00
Repayments
$ (35,000.00)
$ (35,000.00)
Interest
$ (2,100.00)
$ (2,100.00)
Total Financing
$ 35,000.00
$ (37,100.00)
$ -
$ -
$ (2,100.00)
Ending Cash Balance
$ 10,000.00
$ 70,900.00
$ 1,08,900.00
$ 1,46,900.00
$ 1,46,900.00
Cash deficiency = $25,000
Minimum Cash Balance required = $10000
Loan Borrowing = $25000 for making the deficiency go + $10000 for minimum cash balance = $35,000
Interest for Q1 = $35000 x 3% = $1,050
Interest for Q2 = $35000 x 3% = $1,050
Total Interest to be repaid along with principal of $35000 = 1050 + 1050 = $2,100
Q1
Q2
Q3
Q4
Year
Beginning Cash Balance
$ 27,000.00
$ 10,000.00
$ 70,900.00
$ 1,08,900.00
$ 27,000.00
Total Cash receipt
$ 3,20,000.00
$ 4,40,000.00
$ 3,70,000.00
$ 3,90,000.00
$ 15,20,000.00
Total cash available
$ 3,47,000.00
$ 4,50,000.00
$ 4,40,900.00
$ 4,98,900.00
$ 15,47,000.00
Less: Total cash disbursement
$ 3,72,000.00
$ 3,42,000.00
$ 3,32,000.00
$ 3,52,000.00
$ 13,98,000.00
Excess (deficiency) of cash available over disbursements
$ (25,000.00)
$ 1,08,000.00
$ 1,08,900.00
$ 1,46,900.00
$ 1,49,000.00
Financing:
Borrowings
$ 35,000.00
$ 35,000.00
Repayments
$ (35,000.00)
$ (35,000.00)
Interest
$ (2,100.00)
$ (2,100.00)
Total Financing
$ 35,000.00
$ (37,100.00)
$ -
$ -
$ (2,100.00)
Ending Cash Balance
$ 10,000.00
$ 70,900.00
$ 1,08,900.00
$ 1,46,900.00
$ 1,46,900.00
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